Buy-to-let investors opt for variable-rate loans

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by Gill Montia

Buy-to-let investors are opting for variable-rate mortgages, over fixed rate loans.

Research by Legal & General Mortgage Club shows that while fixed-rate mortgages remain in favour with residential homebuyers, landlords are more inclined to take a gamble on the possibility of further cuts in interest rates this year.

According to the survey, around 64% of buy-to-let mortgages taken out between December and February were on variable rates.

During the same period, 57% of residential buyers opted for the safety of a fixed-rate deal.

The average loan to value ratio on a buy a buy-to-let property was 76%, compared to 66% for a residential property.

Steve Smith, director of housing at Legal & General, says: “There is a distinct difference in attitude to risk between residential and buy-to-let borrowers. Owner-occupiers continue to require the peace of mind that a fixed-rate mortgage provides, whereas landlords feel more comfortable on variable rates.”