According to the data, in Q4 2019, the proportion of landlords choosing two-year fixed rates rose to 26%, from just 8% in the previous year.
Mortgages for Business says the growing number of landlords opting for shorter-term rates has been fuelled by the shorter early repayment charge periods – an option which became more popular in the uncertain political climate at the back end of last year.
Despite this, five-year fixed rate products remain the most popular term chosen by 68% of landlords (down from 70% in Q3 and 72% in Q2 2019). This is mainly because lenders are still applying less rigorous stress tests to five-year products than to shorter-term products which, in effect, means landlords can borrow more than with their two or three-year counterparts.
Overall, the number of buy-to-let mortgage products available increased by 72 to 1,981 in Q4 2019 up from 1,909 in the previous quarter. In addition, the number of buy-to-let products available to limited companies increased by 51 to 738 up from 687 in Q3 2019.
There has also been an increase in the popularity of the tracker and discounted rate products, up from 2% in Q3 to 4% in Q4 2019, as landlords respond to increased speculation that the Bank Rate could be cut in the near future.
Steve Olejnik, managing director of Mortgages for Business, said: “Recent political uncertainty has led more landlords to opt for two-year fixed rates over longer-term fixed-rate products.
"Landlords are drawn to the shorter early repayment charge periods associated with these types of products, which provide greater flexibility. Given we now have more certainty in the political system, we forecast that landlords may start to look at longer-term fixes again in the future."
