Two-year fixed-rate options for BTL remortgages are growing in popularity according to a survey by Landbay.
The latest data shows 79% of landlords expect to opt for a fixed-rate when it’s time for them to remortgage.
Some 40% said they would take a five-year fix — a decrease from 46% last December and significantly lower than 68% in August 2022 — but in contrast 32% of landlords said they would opt for a two-year fix, up from 24% in December 2022 and 13% in August 2022.
Landbay said the change in sentiment towards two- and five-year fixed-rates partly stems from the fall out of Liz Truss’s mini-Budget last September when rates rose sharply, while other contributory factors include the volatile economy and the cost of living crisis, fuelled by high inflation leading to rising interest rates.
The data also reported that long-term fixed-rate mortgages were favoured by 7% of respondents and tracker mortgages were selected by 4%.
Paul Brett, MD of intermediaries at Landbay, 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.
“With more borrowers considering short-term fixed-rates when remortgaging, we have introduced a suite of two-year fixes for like-for-like remortgage products, with the added advantage of a lower ICR stress test.
“As long as landlords are borrowing the same as their current mortgage, the remortgage stress test will be at pay rate plus 1%, instead of the standard calculation of pay rate plus 2%.”
