What the interest rate rise will mean for the buy to let market
Today’s small interest rate rise in the Bank of England’s base rate from 0.25% to 0.5% is the first rise in the cost of borrowing for a decade.
What does this mean for the buy to let market?
The average rates for 2 and 5 year fixed buy to let mortgages already appear to have risen and while the average rise is small, the base rate could potentially have an amplified effect on landlords, who are likely to have an interest only mortgage. The risk is that the bank rate becomes an escalator.
Already hit by punitive stamp duty and new restrictions on mortgage interest tax relief, landlords are now potentially facing rising borrowing costs and a further squeeze on their profits.
But, let’s not forget, we are talking about a small rise and historically these are still among the lowest rates we have seen and borrowing costs remain low.
If you would like further advice, please contact Sheetal Bahal on +44 (0)1892 506 150.