Recent trends indicate a growing preference among landlords for five-year fixed-rate mortgages. In a shift from previous trends, over half of the landlords in the process of remortgaging their properties are now opting for five-year fixed-rate mortgages. This marks an 11% increase from April, with 51% of remortgaging landlords choosing this option. The popularity of these mortgages had waned following Liz Truss’s mini-budget, but they’re now seeing a resurgence.

Comparing with Pre-Truss Era

Despite the recent rise in their popularity, five-year fixed rates have yet to reach the dominance they had before the mini-budget era. Previously, these mortgages accounted for a substantial 68% of the remortgage market, indicating a significant shift in landlord confidence and strategy over the past year.

Insights from Industry Experts

Rob Stanton, the sales and distribution director at Landbay, offers insights into this trend. According to Stanton, the renewed interest in five-year fixed rates signifies a growing confidence among landlords in the stability of interest rates. Additionally, the increase in landlords opting for variable tracker rate products suggests a split strategy. Some landlords might be betting on a decrease in base rates in the near future, while others may view these products as a temporary solution amid fluctuating market conditions.

Low Demand for Long-Term Fixed Rates

Interestingly, there is a notable lack of interest in long-term fixed-rate mortgages, such as those with seven or ten-year terms. Only 4% of landlords are considering these options. This reluctance could imply that many landlords anticipate a decrease in mortgage rates in the coming years.

Two-Year Fixed Rates Maintain Steady Popularity

The preference for two-year fixed-rate mortgages remains consistent, with the number of landlords choosing this option unchanged since April. Almost a third (32%) of landlords are opting for two-year fixes, showing a growing demand compared to December last year, when only 24% preferred this type of mortgage.

Variable Tracker Rates: A Growing Niche

There’s also a small but notable increase in landlords choosing variable tracker rate mortgages. Currently, 13% of landlords are inclined towards this option, compared to just 4% in April. This figure was even higher in December, at 17%, indicating fluctuating interest in this mortgage type.

What This Means for Potential Investors

For individuals considering property investment in the UK, understanding these trends is crucial. The shift towards five-year fixed rates could reflect expectations of a stable or declining interest rate environment in the medium term. However, the sustained interest in shorter-term mortgages and variable rates indicates that some landlords are still cautious about long-term financial commitments in a potentially fluctuating market.