Landlords are making the most of abnormally low interest rates in the UK by remortgaging before the Bank of England hikes them.
Remortgaging accounts for almost two thirds (65%) of buy-to-let mortgage activity in the first three months of 2014, according to a survey by broker Mortgages for Business. This is up sharply from 53% in the final quarter of the previous year.
There has been much speculation on when the Bank of England will hike its benchmark base rate up from its record-low of 0.5%, where it has been for over five years.
A better-than-expected economic recovery has fuelled fears that rates will rise early too. But the Bank's governor, Mark Carney, has said he does not yet think the recovery is balanced or secured – and he won't threaten it with premature rate rises.
"Landlords know that exceptionally low interest rates can't last forever," said David Whittaker, managing director of Mortgages for Business.
"But now they need to act on that instinct. The Bank of England will almost certainly raise interest rates before the next general election.
"And that will have a sharp effect on anyone caught out in less than twelve months' time."
Landlords and other mortgage holders can make the most of the low-rate environment by negotiating new loans with better terms, helped on by the minimal base rate and special support for bank lending to SMEs under schemes such as Funding for Lending.