Buy-to-let mortgage brokers are overwhelmingly recommending fixed-rate mortgages to landlords, with five-year fixed products emerging as the top choice.
The research, carried out by BTL lender Landbay, asked brokers, “What’s your go-to mortgage recommendation for landlords right now?”
The study found that 83% of brokers were recommending fixed-rate mortgages with only 17% recommending tracker products.
Roughly two in every five (42%) of respondents said “5-year fixed” with more than a third (38%) opting for 2-year fixes. A mere 3% of brokers picked 10- year fixes.
Rob Stanton, sales and distribution director at Landbay, said: “Brokers’ preference for 5-year fixed mortgages reflects their focus on providing landlords with stability in a volatile market. With 42% of brokers favouring 5-year fixed deals, these products are still outpacing 2-year fixes and tracker products. Landlords are navigating choppy regulatory waters and significant economic headwinds. It’s perfectly sensible to lock into certainty under the circumstances. It’s predictability over flexibility.”
Earlier in May, the Bank of England cut interest rates for the fourth time since August 2024. Interest rates are widely expected to fall further over the coming 12 months, strengthening the case for recommending tracker mortgage.
While there are over 7 million households currently on fixed rate deals, there are fewer than 600,000 households on tracker mortgages (which track the Bank of England base rate, plus a percentage).
Landbay’s polling data demonstrates a significant shift in tone over time, with short-term products and trackers being much more popular now, despite the continuing dominance of longer-term products.
Stanton added: “There has been a shift in the BTL market’s preference for short-term deals and fixes. In the second quarter of 2022, 83% of BTL landlords told us they were looking at 5-year or 10-year fixes. Only one in six – 17% – were interested in trackers or short-term fixes. Most of the industry was looking to shield against rate hikes.
“Compare that to today with 55% of brokers saying trackers and short-term 2-year fixes are their go-to mortgage recommendation. In that context, it’s a completely different story. Brokers’ recommendations suggest a strategic shift away from surety and predictability, towards affordability and profitability. Given markets are currently forecasting a further three 0.25 percentage point cuts before Christmas – which would mean interest rates reaching 3.5 per cent by the end of the year – they’re not wrong to be moving in this sort of direction.”
