Interest rates on buy to let mortgages 'unlikely to increase'

07 May 2010

Written by Jeni Browne.
Buy to let mortgages could be set to remain at a low level after one economist predicted interest rates will fail to change dramatically for several months.

Alan Clarke, UK economist at BNP Paribas, a leading banking and financial services company, has predicted that the Bank of England's Monetary Policy Committee (MPC) will do "absolutely nothing" to alter interest rates at their next meeting on Monday March 10th.

The latest report from the Office for National Statistics, released on April 20th, reported that the rate of inflation had risen to 3.4 per cent in March from three per cent in February - exceeding government targets - leading to speculation that the MPC may vote to raise the official bank rate from its current level of 0.5 per cent.

Mr Clarke, however, believes that this is unlikely to happen immediately after the general election. "They won't know what the precise change in fiscal policy is going to be depending on which government [gets in] and they will do absolutely nothing," he said.

Such changes will not be made until at least early August, the economist said, when the next Bank of England quarterly inflation report is due, as that is the earliest time it will be possible to evaluate the effects of any new government policies.

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