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The proportion of landlords in the UK favouring shorter two year fixed rates for mortgages has doubled in a year, new research suggests. It means fewer are looking at longer term fixed rate mortgages as the shorter terms loans are offering much lower deals at a time when the prospect of an interest rate rise recedes. The research from specialist broker Mortgages for Business also found that despite cheaper borrowing costs, some 73% of landlords want buy to let lenders to relax their lending criteria, up from 47%. A breakdown of the data shows that as of the final quarter of 2014, the proportion of property investors favouring two year fixed rates has increased to 23% from just 12% in the first quarter of the year. By contrast there was a decline in the proportion of landlords who would choose longer term fixed rates. In a marked reversal, fewer would now fix their mortgage repayments for three years than would prefer a two year deal. Just 15% prefer three year fixed rate products, down from 21%. The proportion of property investors who would fix for five years has fallen less dramatically, from 34% in the first quarter of 2014 to 31% in the final quarter. Moreover, in the latest figures only 8% would opt for a 10 year fixed rate if available, down from one in 10. ‘Tempted by cheap rates, landlords are deciding to take their chances with a shorter term deal. It’s true that these ultra-competitive mortgage rates will probably continue for some time as the financial world increasingly predicts virtually zero inflation in the UK and Eurozone, plus a cooling rate of economic growth,’ said David Whittaker, managing director at Mortgages for Business. ‘That doesn’t mean there’s no room for caution. Even in such an exceptional situation, rates are still expected to rise in due time. However, landlords now seem willing to take the chance that won’t happen for at least a couple of years,’ he explained. ‘However, we maintain our recommendation to fix for longer, particularly where the pricing difference between three and five year fixed rates is narrow,’ he added. Overall, the proportion of landlords who say lenders should be doing more to support property investors has risen since the start of last year. This is now 64%, up from 58% in the first quarter of 2014. As borrowing costs have fallen, substantially fewer property investors feel mortgage rates should be lower, 10%, down from 19% at the start of 2014. Similarly, fewer respondents said they would like lenders to reduce fees at 12%, down from 20%, and only 5% felt that lenders should be lending more, down from 14%. The survey revealed that landlords with larger portfolios continue to feel marginalised by the majority of lenders. They would like to see lenders remove age restrictions and non-property related income requirements, increase lending to limited companies and take a more common sense approach to underwriting. ‘Unfortunately for the more seasoned… Continue reading →
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