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Most property investors are choosing fixed rate mortgages for their property investments according to the latest research.
Mortgages for Business found that in the second quarter of this year, a massive 93 per cent of all buy to let property investors chose a fixed rate mortgage, with five-year fixed rates becoming increasingly popular.
As the economic outlook remains uncertain, 69 per cent of landlords chose a five-year fixed rate mortgage during the last quarter.
The research also found that an increasing number of lenders are offering products free from arrangement fees. In Quarter two, 20 per cent of all products had no fee attached.
The average flat arrangement fee, however, increased slightly in the quarter to an average of £1,389.
Remortgaging continues to be far greater than mortgages for new property purchases, though when mortgaging for a new property landlords are increasingly using limited companies.
Overall, pricing remained fairly flat in the second quarter despite an increase in swap rates, suggesting that lenders continue to absorb costs in order to remain competitive.
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 per cent. Why wouldn’t landlords make them a part of their business strategy?’
Buy to let property investors certainly seem to be taking a conservative approach with mortgaging their property portfolios as new private rental sector regulations on tax and stamp duty begin to bite. Fixed rate mortgages in the buy to let sector are dominating the market at the moment and seem likely to continue to do so.