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Landlords must act on competitive mortgage deals before looming buy-to-let rate rises, a broker has warned.

Andrew Turner, chief executive at buy-to-let broker Commercial Trust Limited, urged borrowers to take advantage of cheaper deals while they were available – predicting rates were due to rise in 2019.

Mr Turner said “historically low” rates in the buy-to-let sector had been prominent for some time and reflect a “hugely competitive” marketplace.

But he warned this trend might begin to change as 2019 approached, with rates tied to another potential Bank of England rate rise and Brexit uncertainty.

He said: “The Bank of England’s monetary policy committee have implemented two base rate rises in the last 12 months, yet the added cost to lenders has not shown itself in any significant way in the deals they are offering.

“In my view this will have to change.”

Mr Turner added: “The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and in any event, there is not too much scope for reduction.

“My view is that the overall picture for the next decade is a gradual upward trend in rates.”

Monthly figures from trade body UK Finance identified a recent trend in buy-to-let remortgage growth while purchases in the same market had droppedamid recent tax and underwriting changes.

Last month Jackie Bennett, director of mortgages at UK Finance, suggested the recent relatively strong growth in buy-to-let remortgages showed many existing landlords remained committed to the market.

Mr Turner said he feels the surge in landlord activity around buy-to-let remortgages was no coincidence.

He said: “For this reason, if you are concerned that rates are set to trend upwards, fixing now at a competitive low rate and for a period suited to you, could bring you a great deal of security through turbulent times.”

Liz Syms, chief executive at Connect Mortgages, said the market was still in a very low interest rate environment and fixed rates, including longer term fixed rates, were very well priced.

She said: “All borrower types should look to take advantage of the low fixed rates as there is no guarantee on how long these will continue at the current level, and predictions expect a continued gradual increase of rates.”

But Ms Syms stressed borrowers must also consider future plans when considering longer term fixed rates.

She said: “Most fixed rates have early repayment charges if they are repaid within the fixed rate period, so if there is a chance the borrower may wish to sell the property or change their funding requirements during this period they should consider all options available and not just fixed rates.”

Source: FT Adviser

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