According to a survey carried out by Landbay, when asked, “What’s your go-to mortgage recommendation for landlords right now?”, 83% of advisers who responded said they were recommending fixed rate mortgages. Just 17% were suggesting their clients go for a tracker deal.
The poll revealed that 42% of brokers advised their landlord clients to choose a five-year fixed rate mortgage, while 38% suggested two-year fixes. Just 3% chose a 10-year fix.
Giving BTL landlords certainty
Rob Stanton, sales and distribution director at Landbay, said: “Brokers’ preference for five-year fixed mortgages reflects their focus on providing landlords with stability in a volatile market. With 42% of brokers favouring five-year fixed deals, these products are still outpacing two-year fixes and tracker products.
“Landlords are navigating choppy regulatory waters and significant economic headwinds. It’s perfectly sensible to lock into certainty under the circumstances. It’s predictability over flexibility.”
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However, Landbay’s research indicated that with interest rates expected to fall, there was a shifting preference towards shorter-term deals.
Stanton added: “There has been a shift in the BTL market’s preference for short-term deals and fixes. In the second quarter of 2022, 83% of BTL landlords told us they were looking at five-year or 10-year fixes. Only one in six – 17% – were interested in trackers or short-term fixes. Most of the industry was looking to shield against rate hikes.
“Compare that to today, with 55% of brokers saying trackers and short-term two-year fixes are their go-to mortgage recommendation. In that context, it’s a completely different story. Brokers’ recommendations suggest a strategic shift away from surety and predictability towards affordability and profitability. Given markets are currently forecasting a further three 0.25 percentage point cuts before Christmas – which would mean interest rates reaching 3.5% by the end of the year – they’re not wrong to be moving in this sort of direction.”
