Two-fifths of landlords have mortgages coming up for renewal this year, a survey by The Mortgage Lender found, with a further 41% due to renew their mortgage in the next two to three years. Most landlords (42%) are currently locked into five-year fixed rates, whilst a fifth (21%) are on two-year fixed rate deals. Only 8% of landlords are on tracker rates, and 15% are on standard variable rates, with these borrowers usually seeing an immediate change in their monthly payments when the Bank of England base rate changes.
Landlords whose deals are due to finish within the next few months can typically secure a new rate up to six months in advance. The main advantage of shopping around for your next deal early is that you’ll have peace of mind that you have a competitive deal in the bag in the event that the Bank of England’s Monetary Policy Committee decides to leave rates higher for longer.
If, however, you sign up for a deal and mortgage rates subsequently fall, you’ll still have time to review your options and potentially switch to a cheaper deal if one becomes available.
Chris Kirby, head of sales, Midlands, South and Specialist Distribution at The Mortgage Lender, said: “The Bank of England has been grappling with high inflation for well over a year now, introducing successive rate rises to drive it down to more manageable levels. Although they have had some success in achieving this, there is still a way to go. A rate cut could happen this year, though possibly not until the summer.”
The importance of advice
With so much uncertainty about when rates will fall, and whether inflation will maintain its downward trajectory, professional advice can prove invaluable for landlords worried about rising mortgage costs.Even though mortgage costs have eased considerably since last year’s highs, those needing to remortgage are still likely to face a jump in their monthly payments. According to The Mortgage Lender, landlords expect their monthly costs to rise by £615 on average when they remortgage. Less than a quarter (23%) said they have budgeted for an increase, whilst 30% of landlords said they plan to increase the rent of their property to help cover higher monthly costs.
Mr Kirby said: “With many due to remortgage this year, it’s important landlords speak to a broker to find the most suitable mortgage for them in order to maintain their property portfolios, particularly as costs of living challenges continue. Brokers can offer invaluable support and guidance to help provide a holistic view of what deals are most suitable for clients before they rush into any decisions.”
