Good news for landlords as base rate stays the same
Landlords received positive news when the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to keep its base rate at the current level of 0.5 per cent.
Buy-to let-landlords - especially those on tracker rate products - have historically faced hikes in mortgage interest rates after base rate increases.
Andrew Turner, Chief Executive at Commercial Trust Limited, said: “This is positive news for landlords.
“There has been much speculation that the Bank of England MPC will increase rates during 2018, due to the growth of inflation and the threat of an overheating economy.
“Indeed, the Bank of England has hinted this will be the case over the coming years.
This is the second consecutive meeting to maintain the current rate, after the MPC increased it by 0.25 per cent in November 2017.
“For many landlords, this was the first mortgage rate rise they had experienced, as the base rate had not increased in a decade,” said Mr Turner.
“But, it should be remembered that current mortgage interest rates remain at historically low levels.”
The announcement gives landlords time to assess their investments and to decide whether or not to take advantage of these low rates by remortgaging, ahead of any future rates changes.
The next two MPC meetings are scheduled for March 22 and May 10.
“There have been many changes in the industry that have added an additional layer of complexity to sourcing a suitable mortgage,” said Mr Turner. “This makes getting a correct picture of the options ever more essential.”
The Bank of England indicated the likelihood of further base rate increases at a gradual pace, with efforts to reduce inflation from the present 3 per cent to 2 per cent, continuing to be an important factor in future decisions.
A spokesperson said: “Any future increases in Bank Rate are expected to be at a gradual pace and to a limited extent.
“The Committee will monitor closely the incoming evidence on the evolving economic outlook, and stands ready to respond to developments as they unfold to ensure a sustainable return of inflation to the 2 per cent target.”