The Bank of England has signaled that there may be two further increases in the base rate in the next three years, so is now a good time to get a fixed rate buy to let mortgage? Paul Martins, Head of Buy to Let, gives his view.
Last week the Bank of England’s Monetary Policy Committee voted 7-2 to raise Bank Rate from 0.25%, where it has lingered since August 2016, back to 0.5%. Whilst this is the first hike in 10 years, in reality, it only takes us back to where it’s been sitting for most of the last 10 years. But if, as the BoE suggests, there are a couple more hikes between now and the end of 2020, is now a good time to move to a fixed rate buy to let mortgage which can protect landlords from having to shell out more in monthly mortgage payments for up to five years, depending on the rate chosen?
In all honesty, we haven’t got a crystal ball but I can tell you that several buy to let lenders including The Mortgage Works, TSB, Keystone Property Finance and Landbay have increased their rates over the last week or so, and where one leads, others are sure to follow.
These increases are more likely to have been driven by SWAP rates than base rate (officially called Bank Rate). SWAPs have increased sharply since September, following economists’ predictions on the longer-term outlook for interest rates which means that the cost of fixed rate money has risen and lenders are passing on the increase on new borrowing.
Factor in too the prospect of further increases in Bank Rate in the next three years, and I would say that now is an extremely good time to consider getting a fixed rate buy to let mortgage whether you’re buying or looking to refinance an existing property.
For those of you landlords who like to do some initial research yourselves, use our buy to let mortgage calculator to generate some instant quotes and get a flavour of what you can expect to pay.
If you’re short of time, we can do all the research for you, so do get in touch.
Remember, we are happy to give you a free, no obligation review of your portfolio finances to identify where you could be saving money and/or releasing capital. It doesn’t matter if you’ve got just one or lots of properties. Simply send in your spreadsheet or fill in and return our template and we’ll get cracking.
Paul Martins has left Mortgages for Business for pastures new. For more information or for any questions relating to this blog, please contact the BTL Team on 0345 345 6788, where one of our consultant mortgage brokers will be happy to assist.