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Landlords have a renewed appetite for fixed rates – Stanton

by: Rob Stanton, sales and distribution director, Landbay
  • 08/12/2023
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Landlords have a renewed appetite for fixed rates – Stanton
Our latest landlord survey shows a renewed appetite for fixed-rate products. As a dedicated buy-to-let lender, we find that this group of landlords is increasingly opting for these products, particularly five-year fixed rates. Why is this? There are several factors at play.

Landlords in general are demonstrating more confidence in mortgage interest rate stability over the next two years. In our survey, just 43% of landlords we asked think that rates will stabilise at their current levels. Only 6% think rates will rise, which is encouraging and shows a much more positive outlook compared to this time last year, when 34% thought rates would increase.

We can see this renewed confidence in a move from landlords reverting back towards five-year fixed-rate mortgages. Just over half of the landlords we talked to in this group said they would opt for a five-year fixed rate, an 11% rise from April.

In particular, fixed rates are regaining the popularity lost after the Liz Truss Budget last autumn when the rapid rise in mortgage rates put many borrowers off longer-term fixed rates. Before the Budget, 68% of landlords had opted for a five-year fixed mortgage. That figure was 46% last December.

However, the number of landlords opting for two-year fixed rates has remained the same as in April. Almost a third (32%) said they would opt for a two-year fix, although the figure shows growing demand since last December, when only 24% said they would choose this type of mortgage.

Fewer landlords, only 4%, chose longer-term fixed-rate mortgages (7/10 years) compared to 7% in April and last December.

A third of all the landlords in our survey told us they think rates will fall over the next two years. It will be interesting to see what happens next. This optimism may translate into more demand for two-year fixed rates and variable tracker products.


A (small rise) in trackers

On this note, our survey also revealed a small rise in landlords choosing variable tracker rates, with 13% reporting that they would opt for a tracker product compared to only 4% in April. Last December, this figure was 17%. This increase in those opting for these types of products shows some landlords may be hedging their bets that base rates will come down sooner rather than later, while others may see these products as a temporary solution.

As a business, we must continue tracking the market and pass on rate reductions as soon as possible. In the past month alone, we have reduced rates across our fixed-rate products four times.

Looking ahead, there’s very likely to be a General Election next year. A new government may bring change to the buy-to-let market. In the face of a shifting political landscape, buy-to-let landlords will be looking for certainty and stability more than ever.

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