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More landlords opting for 5-year fixed rate deals

A growing number of landlords are opting for five-year fixed rate mortgages in favour of short-term alternatives which demand more stringent affordability tests, as the cost of longer term products continues to fall, fresh analysis shows.

The data, from Buy to Let Club, reveals that the proportion of its landlord customers opting for five-year fixed rates has hit 42%, up from just 15% two years ago, prior to the introduction of tougher Prudential Regulation Authority’s stress-testing, reflecting a wider industry trend as more landlords look to lock-in to fixed rates, amid economic and political uncertainty.

Buy-to-let investors are also taking advantage of the fact that five-year fixed rates are at a record low.


Between 2008 and 2013, the average five-year fixed buy to let rate at 75% loan-to-value fluctuated between 5% and 7%, yet today many lenders are offering products at rates less than 2.7%.

Ying Tan, managing director of Buy to Let Club, said: “We’ve seen a steady increase in the number of clients opting for five-year fixed rates over the last few years.

“With extremely competitive rates and the added security that they present, it is not surprising that they are a popular option for investors.

“Of course they also have the added benefit of less stringent affordability tests that make them appealing for raising finance against low-yielding properties.

“We have a number of fantastic five-year rates at present including a brand new exclusive with Santander at 2.54% with a £1,999 fee up to 75% LTV that is available for both purchases and remortgages.

“Principality’s 2.55% rate and Virgin Money’s 2.64% rates at the same LTV are also proving popular.”

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