The gap between two and five-year landlord fixed-rate remortgage options is closing, data from Landbay shows.  

Four out of 10 landlords say they plan to take a five-year fixed rate, down from 46% in December and significantly lower than what 68% of these property owners said last August, reports the specialist buy-to-let lender’s latest survey.  

However, 32% of landlords said they will opt for a two-year fix, up from 24% in December 2022 and 13% last August 2022.  

In total, 79% of BTL owners expect to take out a fixed-rate loan when it is time for them to remortgage.  

The survey says: “The change in sentiment towards two- and five-year fixed rates partly stems from the fall out of [former Prime Minister] Liz Truss’s mini-Budget last September when rates rose sharply.   

“Other contributory factors are the volatile economy and the cost-of-living crisis fuelled by high inflation leading to rising interest rates.”  

The study points out that the push towards two-year terms by a rising number of landlords is due to the expectation that mortgage rates will fall in the next couple of years as inflation heads back towards the government’s 2% target, from its current 8.7% level.  

It says: “Two- and five-year fixed rates have been fairly close in recent months and some landlords don’t want to lock into five years if they think rates might come down.”  

Longer term fixed-rate mortgages – ranging from seven to ten years — were favoured by 7% of BTL owners, while tracker mortgages were only selected by 4%.  

Landbay managing director, intermediaries Paul Brett says: “It’s interesting to see that there has been a rise in the number of remortgaging landlords considering two-year fixed rates and a drop in those opting for five-year fixes.   

“No one knows where rates will go but many of our survey respondents are hoping to see a fall within two years.  

“With more borrowers considering short-term fixed rates when remortgaging, Landbay has listened to the market and [earlier this month] introduced a suite of two-year fixed rate like-for-like remortgage products.   

“They come with the added advantage of a lower interest cover ratio stress test to help with affordability.   

“As long as landlords are borrowing the same as their current mortgage, the remortgage stress test will be at pay rate plus 1% instead of the standard calculation of pay rate plus 2%.”