Nearly seven in 10 landlords opt for a five-year fix
The most popular choice for landlords transacting via the specialist buy to let broker Mortgages For Business are five-year fixed rates, with 69% of landlords choosing this option, according to an index.
About 93% of landlords financing buy to let property chose a fixed rate mortgage in the second quarter, the research also found.
The index also found that an increasing number of lenders are offering products without arrangement fees. In the second quarter, a fifth of all products had no fee attached, up from just 14% in the third quarter 2017.
Other incentives were also on the increase, including cashbacks, free valuations and free legals for landlords remortgaging property.
However, the average flat arrangement fee increased slightly in the quarter to an average of £1,389, at less than £1,500 this still represents reasonable value.
CEO of Mortgages for Business, David Whittaker, said: “We’ve been recommending five-year fixed rates for a long time. At the moment there is very little difference in pricing between fixed and variable rate products. In today’s uncertain economic climate, particularly the road crash Brexit negotiations, fixing makes a lot of sense, especially as the average price is just 3.52%.
“Why wouldn’t landlords make them a part of their business strategy?”
Shaun Church, director at Private Finance, added that the fact landlords prefer a five-year fixed rate is not surprising because of the housing rent calculation. He added: “This is the trend we are going to see until regulation changes, but I think it won’t happen soon.”