Limited company mortgages at all-time high in buy-to-let market

Borrowers favour five-year fixed rates over shorter-term deals

The Nationwide House Price Index has revealed that over 95% of mortgage borrowers have opted for a fixed-rate mortgage in the past few months, and half of those were five-year fixed deals.

There has been a significant drop in five-year fixed mortgage rates, with the average rate falling 0.19% in the last 12 months. The gap between the average two and five-year fixed rates has narrowed, encouraging borrowers that typically jump from one short-term rate to another to consider fixing for longer.

According to Moneyfacts.co.uk, the difference between the average five and two-year fixed rate on a 95% loan-to-value (LTV) is currently only 0.33%, and the gap is at its narrowest on a maximum 75% LTV at 0.27%.

Darren Cook, finance expert at Moneyfacts.co.uk, said: “It seems that competition within the five-year fixed-rate mortgage sector is pushing the average rate down closer towards the two-year fixed average rate. As a result, the difference between these two average rates now stands at 0.31%, which is 0.11% lower than it was a year ago.”

Reduced monthly repayments

Moneyfacts highlights that with the gap between the two and five year fixed rates narrowing, the difference in the monthly repayments is reducing, too. On a repayment mortgage of £250,000 over 25 years, the average two-year fixed rate repayment stands at £1,115.26, while the average five-year repayment is £1,154.56. The difference of £39.30 per month for an extra three years of financial security will be attractive to many borrowers.

Borrowers might be facing economic uncertainty, but falling rates on longer-term mortgages are cushioning the blow as they choose to lock in for longer.

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:

STAY AHEAD OF THE MARKET

Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment

FIRST FOR NEWS AND KNOWLEDGE.

Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:

 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

 

+852 6699 9008

Open from 9am-6pm HKT