Two- and three-year fixed commercial mortgages are available at all-time low rates, reported FTAdviser.com in February 2017.
The Buy-to-Let Mortgage Product Index monitors mortgage lenders and products available for the buy-to-let landlord. The January 2017 index shows that fixed two-year commercial mortgages are being offered at 2.92%, and three-year fixed mortgages can be found at 2.76%
Five-year fixed-rate mortgages are 3.77%, which is around 1% above the two more short-term rates. Many borrowers are choosing five years to protect themselves from rate rises. The British economy is uncertain in the wake of the Brexit vote and some financial experts predict that interest on lending will rise. A fixed-rate mortgage can protect borrowers from rate rises for a period.
Tracker mortgages also performed well, with an average interest rate of 2.81%
The low rates are good news for landlords who have been affected by the rising costs of the 2016 stamp duty rise and the reduction of mortgage interest tax relief. Landlords can make savings by switching to a low-rate commercial mortgage.
The Royal Institute of Chartered Surveyors (RICS) has said that it expects rents to rise by around 25% over the next five years so that landlords can cover their extra costs. House prices are expected to have a lower increase than rents at 20% during the next five years.
The RCIS says that there is a shortage of houses to rent and wants developers to build more properties to fulfil the demand for rented accommodation.
