Mortgage base rate positive for landlords
After a second consecutive meeting, the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to keep its base rate at the current level of 0.5%.
Commenting on the news, Andrew Turner, chief executive at Commercial Trust Limited, a buy to let and landlord mortgage brokers, 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 stands as welcome news for landlords - especially those on tracker rate products - after the MPC voted to increase the Bank Rate by 0.25% to 0.5% on the 1st November 2017.
This is the first time the base rate had increased in a decade, resulting in some lenders increasing their interest rates on tracker and variable rate mortgages and for many landlords, this was the first mortgage rate rise they had ever experienced.
Although current mortgage interest rates remain at historically low levels, this gives landlords more time to evaluate their circumstances and potentially remortgage their properties in anticipation of any future changes.
With the next two MPC meetings scheduled for March 22nd and May 10th, the Bank of England has indicated the likelihood of further gradual base rate increases with an effort to sustainably reduce inflation from the present 3% to 2%. Commenting on the announcement, the Bank of England said:
“In light of these considerations, all members thought that the current policy stance remained appropriate to balance the demands of the MPC’s remit. 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% target.”