A new 10-year buy-to-let mortgage has come to the market this week, allowing rate-conscious landlords to fix their mortgage repayments for a full decade.
The product is available at up to 75% loan-to-value (LTV), meaning just a quarter of the value of the rental property is required as a deposit. At 4.99% per annum, it is also reasonably priced – comparable to shorter-term fixed rate products in similar LTV brackets – and comes with an arrangement fee of just £995.
Though 10-year fixed rates are becoming increasingly popular with owner-occupiers, with the number of such products available increasing almost tenfold last year, landlords are still showing a preference for the shorter-term fix. Between the first and fourth quarters of 2014 the number of landlords favouring two-year fixed rates almost doubled, whilst the number fixing for longer saw a sharp decline 1.
This suggests that some landlords, at least, are not quite ready to ‘play it safe’. The consensus at the end of 2014 was that interest rates, and therefore borrowing costs, would begin to rise in the middle of this year 2; however, very low inflation in December means that the inevitable might be delayed until the final quarter of 2015 or maybe even early 2016 3.
Nevertheless, the pricing difference between long- and short-term fixes is currently minimal, and more risk-averse landlords might find it preferable to take advantage of this fact. To discuss your options with an advisor, get in touch with our team on one of the numbers at the top of this page or request a quote today.
- Walker, P. “Buy-to-let landlords backing shorter term fixes.” FT Adviser. 9 Jan 2015.
- Lambert, S. “When will interest rates rise?” This is Money. 19 Dec 2014.
- Oxlade, A. “Predictions: when will interest rates rise?” The Telegraph. 9 Jan 2015.