The buy-to-let survey showed long-term fixed rates no longer dominate the market, with many investors opting for a shorter mortgage term. Its research, examining buy-to-let mortgages on a true cost basis – over 10 years – revealed 13 of the 15 leading fixed rates are for a three-year term or less, a marked change from February 2005’s figures.
Responding to the findings, Alan Harper, senior researcher at Moneyfacts, said: “A year ago, the cheapest fixed rates were around £4,000 more expensive than the lowest variable rate. 12 months on and fixed rates still work out more costly if the borrower sticks with the same product over the full 10 years, but now the difference in cost is only around £2,000.
“Fixed rates offer borrowers peace of mind against future variable rate increases and the higher costs reflects this. But even with Base Rate having been at historically low levels for some time now, the additional £2,000 over 10 years is still a relatively small price to pay for that protection against potential rate increases.”
Michael Brill, director of Baronworth Investment Services, said: “I think shorter-term rates are more popular as there wasn't the same amount of choice before. Also, most landlords prefer shorter-term rates as if they want to sell their property, they don't incur a penalty.”
