22 Jan

Increase in short-term buy-to-let mortgages

Increase in short-term buy-to-let mortgages

There has been an increase in landlords opting for shorter two-year fixed mortgages, according to new figures.

Research by broker Mortgages for Business found demand has doubled for the shorter products, especially as they are offering more attractive deals than the longer term loans.

Although borrowing costs have fallen in recent months, the study found 73 per cent of landlords want lenders to reduce their lending criteria further. This included support for removing age restrictions and non-property related income requirements, as well as increasing lending to limited companies and taking a more flexible approach to underwriting.

Overall, during the last three months of 2014, the proportion of investors in property opting for two-year fixed rates has risen to 23 per cent, compared to 12 per cent in the first three months of last year.

Just 25 per cent of landlords opted for three-year products over the year, down from 21 per cent at the start of 2014.

"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," explained David Whittaker, managing director at Mortgages for Business.

He added: "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."ADNFCR-1222-ID-801771397-ADNFCR

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