Buy-to-let mortgage brokers are “overwhelmingly” recommending fixed-rate mortgages to landlords, with 5-year fixed products emerging as the top choice, research from Landbay has revealed.
The survey, which asked 60 BTL mortgage brokers ‘what’s your go-to mortgage recommendation for landlords right now?’, found that 83 per cent of brokers recommend fixed-rate mortgages, compared to only 17 per cent recommending tracker products.
It also detailed that 42 per cent of respondents recommend five-year fixes while 38 per cent opt for 2-year fixes.
Just 3 per cent of brokers picked 10-year fixes.
Landbay sales and distribution director, Rob Stanton, said: “Brokers’ preference for 5-year fixed mortgages reflects their focus on providing landlords with stability in a volatile market.
“With 42 per cent of brokers favouring 5-year fixed deals, these products are still outpacing 2-year fixes and tracker products.
“Landlords are navigating choppy regulatory waters and significant economic headwinds. It’s perfectly sensible to lock into certainty under the circumstances.
“It’s predictability over flexibility.”
However, Landbay also pointed out that, while longer-term products continue to dominate, the popularity of tracker mortgages has increased recently.
Explaining this trend, Landbay said that interest rates are expected to fall further over the coming 12 months, which, it argued, strengthens the case for recommending tracker mortgages.
While there are over 7mn households currently on fixed-rate deals, there are fewer than 600,000 households on tracker mortgages.
The polling demonstrates a “significant shift” in tone over time, with short-term products and trackers being much more popular now, despite the continuing popularity of longer-term products.
Additionally, Stant observed that there has been a “shift” in the BTL market’s preference for short-term deals and fixes.
He explained that, in the second quarter of 2022, 83 per cent of BTL landlords told Landbay that they were looking at 5-year or 10-year fixes.
Only 17 per cent said they were interested in trackers as most of the industry was looking to shield against rate hikes.
“Compare that to today with 55 per cent of brokers saying trackers and short-term 2-year fixes are their go-to mortgage recommendation. In that context, it’s a completely different story,” he added.
tom.dunstan@ft.com
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