Mortgage Marketwatch
Exclusive: Landlord trust shaken on lifetime tracker rates – NLA
Landlords are still fixated on two-year fixed rate deals because the Bank of Ireland and West Bromwich tracker lifetime rate hikes have undermined trust in tracker rates, said a landlord trade body.
In the second part of our buy-to-let panel debate sponsored by Paragon, Richard Lambert, chief executive of the National Landlords Association, said there has to be trust between a landlord and a mortgage lender.
“What we have seen in the last few years is that with lifetime tracker deals, there is anything but,” he said.
“And so, as long as there is that level of distrust, landlords won’t commit to an institution or deal if they can’t trust them.”
In September 2013, West Bromwich Building Society raised its interest rate 2% which affected 6,700 Buy to let tracker loans. The Bank of Ireland also hiked its tracker rate in February 2013, affecting 13,500 residential and buy-to-let customers, but the majority were investors.
The Financial Ombudsman confirmed it had received 200 complaints about rate rises on trackers to July 2013.
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John Heron, managing director of mortgages at Paragon and Mortgage Trust (pictured) said its most popular products still remained long-term and five-year trackers, which tallied with the fact the average landlord holds a property for 12 years.
“There is a problem with two-year fixed rates because landlords are tempted to remortgage every two years, and the lender will also lose money. A two-year product has a place but as the market develops we have to provide a much better range of solutions,” he said.
To see the first part of our two-part panel debate, click HERE.