Before the Budget, the base interest rate was forecast to fall in November and then again through 2025, with Capital Economics predicting it would reach around 4% by the end of the year.
But when changes are announced that will affect the economy and government spending and borrowing, there’s usually an impact on interest rates.
In the case of this Autumn Budget, with the increase in employers’ NI likely to lead to price rises for consumers and the Government planning to borrow more money for investment, we shouldn’t be surprised if rates tick slightly upward.
Although the Bank of England is already anticipating that inflation will rise from its current 1.7% to around 2.5% by the end of the year, the Monetary Policy Committee did drop the base rate from 5% to 4.75% on 7th November, as expected.
However, the Bank said that the changes announced in the Budget could slow the pace of future interest rate cuts.
Immediately following the Budget, the Office for Budget Responsibility (OBR) said market expectations for the base rate in 2025 varied between 3.6% and 4.7%, "underscoring the continued uncertainty around the monetary policy outlook".
How could mortgage interest rates be affected?
In the medium term, the OBR is projecting that average mortgage rates could increase by 0.8% over the next three years, but it will depend primarily on inflation.
Meanwhile, the Bank of England is relatively optimistic, suggesting that slow but stable economic growth should result in the base rate holding at around 3.6% through 2026 and 2027, which should support competitive mortgage rates from lenders.
How have the best Buy to Let rates changed since the Budget?
Thanks to the reducing base rate, mortgage interest rates have been steadily falling this year.
However, the Budget prompted different reactions from lenders, with Santander almost immediately reducing many rates, while Virgin Money made small increases across its range of products.
Looking at Moneyfacts, it’s clear that overall there has been a slight increase since last month in the best available rates:
Pre-budget (Oct) Post-budget
- 2-yr fixed, 65% LTV 2.83% 2.97%
- 5-yr fixed, 65% LTV 3.68% 3.74% at 60% LTV
- Variable at 75% LTV 4.9% 4.9%
- 75% LTV 3.29% 3.34%
- 80% LTV 3.09% 3.58%
But even the smallest economic changes can make a difference to lenders’ products, and it will be some months before the market really feels the impact of both the Autumn Budget and the recent USA election result.
Curious what Buy to Let rates are available right now? Check out our new live rate table in partnership with Embrace Financial Services.
Discover the latest Buy to Let rates
As always, we recommend that the best way to stay up to date with all the latest deals and find one that’s most appropriate for you, is to work with a mortgage broker that specialises in Buy to Let.
You can arrange a free initial chat with a mortgage adviser at Embrace Financial Services at any time via our website.
And if you’d like to discuss how the Budget announcements could affect any aspect of property investment, just get in touch with the team in your local Your Move branch.
The Your Move Content Marketing Team
