Buy to let mortgage lenders are gearing up for interest rate rises expected around the end of the year by offering longer fixed rate loans.
Skipton Building Society has even jumped to the head of the field by offering a seven year fix.
Borrowers are charged 4.6% up to 60% loan to value with an arrangement fee of £750.
Larger loans – up to 75% loan to value – come at 5% and a £1,750 fee.
How base rate rises will affect buy to let yields is a concern for many landlords, so trying to best guess the Bank of England by taking a fixed rate provides a safe haven while the market sorts itself out.
One of the factors to consider is mortgage rates have uncoupled from the Bank of England official base rate since the credit crisis.
The base rate has been pegged at 0.5% for more than four years, but this has not stopped buy to let mortgage rates gradually increasing.
Bank governor Mark Carney has promised any rate changes will be gradual so as not to upset Britain’s still fragile economic recovery.
One lender cutting rates is the Leeds Building Society.
In the past few days, the society has sliced 0.4% off buy to let rates and introduced a raft of new three and five year fixed rate deals.
Rates start at 3.09% for a three-year fix at 60% loan to value and 3.69% for a five year fix at 60% loan to value.
Leeds Building Society’s Martin Richardson said: “We’ve refreshed our range following broker and customer feedback and the fees assisted versions of the products offer additional choice, depending on the borrower’s individual needs, including those homeowners who are looking to remortgage.”
Some buy to let pundits reckon the market may switch again.
After the credit crisis, earnings came from rents as prices plunged, but the rate of rent rises is starting to slow. Property values are increasing, so we could see property investors making money from capital appreciation rather than rents.