Landlords warned ‘no reason to assume’ end of rising costs as base rate hits 4%
The Bank of England’s decision to raise the base rate to 4% was a question of when, not if, according to one specialist lender.
Joshua Elash, founding director of MT Finance, said the increase had come as no surprise, with rising inflation leaving the Monetary Policy Committee (MPC) with little choice. He said: “Persistent inflation has forced the Monetary Policy Committee’s hand, and it has long been a question of ‘when?’ not ‘if’.”
The decision comes as landlords continue to face higher borrowing costs. Moneyfacts data showed that average BTL mortgage rates have risen from the 4% range to the 5% range since 27 February, the eve of the US-Iran conflict.
Three-year fixed rates have recorded the largest increase, rising by 138 basis points (bps) from 4.16% to 5.54%.
Steve Cox, chief commercial officer at Fleet Mortgages, said landlords were already contending with rising costs.
He commented: “For buy to let, the more immediate issue is that landlords have already been dealing with a higher mortgage rate environment, and that has consequences for affordability, refinancing decisions and the ability to make future purchases.”
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Cox also said lenders had been responding to rising funding costs in recent weeks and there was “no reason to assume today’s decision will bring an end to that process”.
He further urged landlords shopping for rates to consider the options available to them now, “rather than assuming there will be a better opportunity further down the line.”
However, Martin Sims, distribution director at Molo Finance, cautioned against assuming the base rate increase would automatically translate into higher fixed mortgage rates.
He said: “Mortgage lenders aren’t sitting around waiting for the bank to tell them what to charge, and wholesale funding markets have already been responding to concerns about inflation and the prospect of further increases.”
Sims warned: “I think brokers need to be careful about assuming today’s decision tells us everything we need to know about where mortgage rates are heading.”
