Next week, Prime Minister Rishi Sunak and Chancellor of the Exchequer Jeremy Hunt will unveil their plans for supporting the country through the cost-of-living crisis in the Autumn Statement. Having had a Base Rate increase just last week, how have lenders reacted, and what can we expect from buy to let mortgage rates?
Just last Thursday, the Monetary Policy Committee (MPC) met to discuss the current state of affairs in the money markets. This resulted in the seventh Bank of England Base Rate rise this year with the ongoing goal of curbing rising inflation levels, currently at 10.1%.
Industry experts had predicted the staggered Base Rate rises we’ve seen throughout the year and the increases in mortgage interest rates as a result. However, no one anticipated the extent to which interest rates have risen over the past couple of months. To recap, when Liz Truss and Kwasi Kwarteng announced their plans at the mini-budget less than two months ago, the turmoil that ensued in the financial markets saw interest rates rise significantly in a short amount of time. The mainstream media then focused on rising mortgage interest rates, which left landlords and homeowners concerned about getting their next mortgage. Jeremy Hunt and Rishi Sunak have restored some confidence in the money markets, which has settled rates once more, despite the rise to the Base Rate last week. However, many landlords remain sceptical and now eagerly await further announcements in next week’s Autumn Statement.
How have BTL lenders reacted to the Base Rate Rise?
On the whole, buy to let lenders feel much more comfortable and confident about the market now that Rishi Sunak and Jeremy Hunt have kickstarted their plans. This has helped to stabilise fixed mortgage rates for the time being and bring them down to more manageable levels. Just this week, we saw a leading specialist lender release a highly competitive five-year fixed rate from 5.69%*. The likelihood of rates returning to the competitive lows we have grown used to is very slim, so a product like this could offer landlords financial security for the next few years as the markets readjust and settle. It’s also a strong indication of where the market will sit for the foreseeable.
What will this mean for lenders going forward?
We expect that, so long as the Autumn Statement doesn’t include any further controversial plans for the economy, the market will remain on the same trajectory that it is on now. We predict that the Bank of England will increase the Base Rate by around 0.5% in the new year, although some industry experts anticipate an interim rise in December. With two schools of thought surrounding the upcoming Base Rate rise, landlords can expect that the announcements in the Autumn Statement will play a large part in the market’s next move. Whether this will impact fixed-rate pricing depends on your lender and how they source their funding, either through SWAP rates or from financial corporations.
If you are concerned about your next mortgage, please get in touch with one of our expert brokers. Our team can offer you expert advice and have whole-of-market access to help find you the best rate. Call us on 0345 345 6788, or by submitting an enquiry here.
* Rate as at 10th of November 2022
11th November 2022