Many investors 'still opting for fixed rates' - buy to let mortgages

12 January 2009

Nearly half of people with buy to let mortgages opt for a fixed rate, despite the recent Bank of England base rate cuts, figures have shown.

Legal & General's Mortgage Purchase Index for the fourth quarter of 2008 found that 43 per cent of buy to let investors chose a fixed-rate deal, despite base rate cuts potentially making tracker products cheaper.

Director of housing for the firm Stephen Smith said that borrowers who are classed as higher risk - such as buy to let investors - and have larger loan-to-values (LTVs) are not necessarily benefiting from rate cuts.

"Higher LTV borrowers have been shut out for now, either by having products removed from the market or by having rates raised so much that the standard variable rate is the only cost-effective option," he remarked.

Mr Smith also noted that many base rate tracker products have been withdrawn following the reductions.

Last Thursday the base rate was slashed to 1.5 per cent.