Since some fixed mortgage rates rocketed to above 6% following last September’s mini-budget, borrowers have been understandably concerned about how much their monthly payments will be when they next refinance or get a new mortgage.
And now that the Bank of England base rate has risen to 4.50%, many people are wondering if mortgage rates are going to keep going up as well.
Before we look at what’s likely to happen in the future, here’s a summary of how the base interest rate has changed since the credit crunch hit in 2008:
- November 2008: dropped from 4.5% to 3%
- March 2009: fell to 0.5%, where it stayed for seven and a half years
- August 2016: dropped to 0.25%
- August 2018: rose to 0.75%
- March 2020: dropped to historic low of 0.1%
- December 2021: rose to 0.25% - the first of 11 rises that have brought us to…
- March 2023: reached 4.25%
Although the current rate might seem high, through much of the 1980s, into the early ‘90s, a double-digit base rate was the norm and sub-5% wasn’t commonplace until the early 2000s. We have simply got used to very low mortgage interest rates thanks to the more recent 13-year stretch where the base rate sat below 1%.
Where are Buy to Let rates now?
Many rates are somewhere between 4% and 5%. For example, the following are available as at the first week of April:
- 2-year fixed, 65% LTV – 3.88%
- 3-year fixed, 75% LTV – 4.96%
- 5 year fixed, 60% LTV – 4.15%
- Variable, 80% LTV – 3.99%
Source: https://moneyfactscompare.co.uk/mortgages/#
Of course, the type of mortgage and rate you can secure will depend on the property, rental income and your personal circumstances, so it’s important to speak to a Buy to Let specialist mortgage adviser. If you’d like to discuss your options, our partners at Embrace Financial Services have access to a comprehensive panel of lenders and thousands of mortgages. You can book a free initial consultation for a day and time that suits you via our website.
What are the experts predicting?
Given that inflation is the main driver of interest rates, we need it to come down significantly from the 10.4% it hit in February. And the good news is that the Office for Budget Responsibility is forecasting that inflation will indeed drop to below 3% by the end of this year.
So, although last year some market analysts were expecting the base rate to hit 6%, most are agreed that it will probably peak at 5.0%, with one more rise possible in the next few months. After that, Capital Economics is predicting that it will fall back to 3% by the end of 2024 and then drop to 2.5% by the end of 2025.
These forecasts should give both consumers and mortgage lenders confidence and when this happens, lenders are more likely to want to compete for business. So, although rates in 2023 may be higher than borrowers would like, it’s likely that this time next year we’ll see a good choice of mortgage products at competitive rates.
Want to find out what your Buy to Let mortgage options are? Speak to our partner Embrace Financial Services who will find you the most suitable rate for your needs.
Book Buy to Let mortgage appointment her
‘Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.’
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. Embrace Financial Services normally charge a fee for their services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but the standard fee is £549. Complex cases usually attract a higher fee. Embrace Financial Services will discuss and agree the fee with you prior to submitting any mortgage application.
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