What remortgaging landlords think about fixed rates

Fixed-rate remortgages continue to be the preferred choice for buy-to-let property owners – but the gap between choosing a two-year or five-year fixed rate is narrowing, a survey reveals.

Landbay says that 79% of landlords will choose a fixed-rate mortgage when it’s time to remortgage though the preference for a five-year fixed rate has seen a decline.

Just 40% of respondents favour this option, compared to 46% in December and a substantial 68% in August 2022.

Now, there has been a notable increase in interest for a two-year fixed rate among landlords, with 32% intending to choose this option.

That’s up from 24% in December 2022 and a mere 13% in August 2022.

‘Rise in the number of remortgaging landlords’

Landbay’s managing director of intermediaries, Paul Brett, said: “It’s interesting to see that there has been a rise in the number of remortgaging landlords considering two-year fixed rates and a drop in those opting for five-year fixes.

“No one knows where rates will go but many of our survey respondents are hoping to see a fall within two years.”

He added: “With more borrowers considering short-term fixed rates when remortgaging, Landbay has listened to the market and introduced a suite of two-year fixed rate like-for-like remortgage products.”

Rise in the number of remortgaging landlords

The recent changes in the buy-to-let remortgage market have been influenced by several factors, including Liz Truss’s mini-Budget in September and the unstable economic environment.

These events have contributed to fluctuations in two- and five-year fixed-rate preferences among landlords.

The growing inclination towards two-year fixed rates is a result of landlords believing that mortgage rates will fall in the coming years, as inflation is expected to return to the government’s 2% target.

This belief has been further reinforced by the closeness of two- and five-year fixed rates in recent months.

Landlords are reluctant to commit to a five-year term

Also, Landbay says, landlords are reluctant to commit to a five-year term if they anticipate rates dropping in the near future.

Long-term fixed-rate mortgages, such as those with seven or 10-year terms, were favoured by only 7% of survey respondents.

Tracker mortgages, on the other hand, were chosen by just 4%.

The survey results highlight the evolving preferences of landlords as they navigate the uncertain economic landscape and its impact on the buy-to-let remortgage market.