The Bank of England has announced its latest decision on base rate.
This has been increased by 0.25 per cent to 4.5 per cent. It’s the 12th successive increase, taking it to the highest level since 2008.
Angus Stewart, chief executive of online buy to let brokerage Property Master, says: “This continued increase in base rate will reflect in higher interest rates for those BTL borrowers on tracker or discounted rate products or who remain on the lenders’ SVR. If you’re on the SVR and not planning on selling your property in the near future it might be worth looking at fixed or tracker products to mitigate the increased mortgage cost.
“We continue to see increasing competition between lenders and the margin between fixed and variable rate products has reduced considerably in the past few months. The key challenge for many landlords is meeting the affordability requirements for a new mortgage especially in areas, such as London and the South East, where rental yields are lower.”
Marylen Edwards, head of buy to let lending at property lender MT Finance, comments: “Considering recent events in the global financial markets, this latest rate rise was not unexpected. While a reduction in base rate would have been welcome news, it feels as though another increase is necessary at this moment in time to combat stubbornly high inflation and help bring back some much-needed stability. Hopefully this will be the last rise before we start to see a plateau.”
Jonathan Rolande, spokesman for the National Association of Property Buyers, adds: “The rise today is very disappointing. The Bank of England has very limited tools to combat the inflation that is making life so difficult, raising interest rates is one of them.
“Housing costs such as mortgages and rents have rocketed in the last two years – up 26 per cent on average. The rise in rates may help to control these increases eventually but in the short term, it will cause more misery to millions of homeowners and tenants, who often see rents rise in line with the cost of their landlord’s mortgage.
“This is the 12th increase in a row and is one that could potentially snuff out the mini-recovery that has begun this spring. We must hope there isn't a 13th.”
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