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Today, the MPC announced the fourteenth consecutive increase to the Base Rate. What does this mean for the money markets, and how will today’s announcements impact landlords?

The Bank of England has voted to increase the Base Rate to 5.25%. Today’s increase comes just over a month after we saw a 0.5% rise in June following unexpectedly-high core inflationary figures. As a result, today’s announcement will come as no surprise to industry experts as the Bank of England continues to attempt to curb inflation levels. 

Predictions for the Base Rate going forward

Today’s rise should hopefully help ease some pressure off the money markets, and so long as inflation continues the same downward trajectory, we predict just one further Base Rate rise next month. Given the ever-changing landscape of the financial markets, we cannot be certain, but we, alongside many other industry experts, anticipate September’s Base Rate increase to be the last for 2023.

Looking further ahead, it’s highly unlikely we will see a decrease in the Base Rate until late 2024 at the earliest.

How will the Base Rate rise impact mortgage interest rates?

Fixed-rate mortgages

If you are on a fixed-rate mortgage, then this will have no impact at all, but if looking to secure a new fixed-term product, you are unlikely to see much change to rate pricing following today’s announcement. This is because SWAP rates have a greater impact on mortgage interest rate pricing than BBR.

SWAP rates are what lenders will pay to other banks and financial institutions to acquire fixed funding for a set period of time. Nervousness in the money markets can drive up SWAP rates, directly impacting lenders’ cost of funds. But as this increase and September’s expected similar increase to BBR is widely accepted, the money markets are less volatile, and we may start to see the consistency or calmer waters we need.

Again, as many experts anticipated today’s announcement, it’s highly likely that most lenders will have already factored in today’s Base Rate rise to their pricing and will not need to make further changes.

Tracker and Variable mortgages

If you are on a Base Rate tracker or sitting on your lender’s Standard Variable Rate (SVR), you should expect your monthly repayments to increase. Furthermore, with the expectation of another rise next month, it’s more important now than ever to review your property finance options to ensure you’re on the most suitable product.

One of our expert brokers can discuss your remortgage options with you and see how much you could save. Our experience in the buy to let sector means we are best-placed to discuss your plans going forward.  

Call us on 0345 345 6788 or submit an enquiry here to speak to an expert.

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