Rachel Reeves’ Autumn Statement threatens to shake not just the property market, but the wider economy altogether. Here, we look at the threat to landlords and mortgage rates.
Landlords across the UK are being urged to prepare for potential turbulence in the housing and mortgage market as Rachel Reeves, the Chancellor, faces intense pressure over decisions due in the upcoming Budget.
Analysts warn that poorly judged policies could shake money market confidence, trigger a spike in interest rates, and put extra strain on landlords who already face high mortgage costs.
A report by Oxford Economics outlines a scenario in which financial markets lose confidence in the Government’s fiscal plans. This could lead to higher government borrowing costs (Gilt yields), a weaker pound, and further pressure on the Bank of England to keep interest rates elevated.
Why Landlords Should Pay Attention
Reeves has promised to boost economic growth and ease the cost-of-living crisis, but she is also expected to fill a potential £30 billion fiscal gap. Any missteps – especially tax increases or spending commitments seen as fiscally irresponsible – could spark market jitters, causing lenders to reassess risk and push up mortgage rates further.
For landlords, this matters because:
• Buy to let mortgage rates are already at elevated levels, and any move by the Bank of England to hold or raise the Base Rate would further squeeze profit margins
• Remortgaging costs could increase sharply if bond yields rise and banks pass those costs on
• A weaker pound may also fuel inflation, meaning higher costs for property maintenance and services
Market Sentiment Is Key
The Oxford Economics report notes that the UK is particularly vulnerable to swings in investor confidence, as a large share of its debt is held by overseas investors. Unlike the US or Japan, which benefit from reserve currencies and strong domestic demand for government bonds, the UK has fewer buffers if markets turn against it.
Next month’s Budget could be a “trigger point” for such a shift in sentiment. If Reeves announces tax increases, particularly across a range of smaller taxes, markets may see it as a sign of weakness or desperation. This could reduce confidence in the Government’s long-term fiscal stability, something that directly affects mortgage rates.
What Could Happen to Mortgage Rates and Inflation?
In the scenario outlined by Oxford Economics, if the bond markets are spooked and sterling falls:
1. The Bank of England may be forced to hold interest rates at 4% throughout 2026, rather than begin cutting them as previously expected
2. This would mean higher borrowing costs for longer, significantly impacting landlords coming off fixed-rate deals or looking to expand their portfolios
3. Fixed-rate mortgage rates would increase as these are linked (at least in part) to Gilt rates
4. Inflation could remain higher for longer, leading to rising costs across the board
If confidence collapses, Labour could be forced into an abrupt policy U-turn, including spending cuts that would reduce support for public services and potentially impact housing-related policies, such as housing benefit or local authority support.
How Landlords Can Prepare
Despite the uncertainty of what’s to come, there are several steps you can take to help you mitigate Reeves’ budget next month:
• Lock in rates for applications up to 6 months in advance – your mortgage rate is not secure until you make an application, and many lenders allow you to switch to a more competitive rate (if one becomes available) before you complete. This means you can secure today’s pricing and are protected against rate rises, but you don’t miss out if rates come down!
• Stress test your portfolio: Ensure you can handle higher rates for an extended period of time. We can help you to price up the cost of your mortgage deal over its term
• Review mortgage products now before rates potentially rise again
• Keep an eye on Budget announcements and market reactions
• Watch for changes in tax policy affecting landlords, such as Capital Gains, Inheritance tax, or mortgage interest relief
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The bottom line is that Rachel Reeves' upcoming Budget carries high stakes, not just for the Government, but for landlords across the UK. With interest rates, mortgage costs, and housing market sentiment all hanging in the balance, landlords should stay alert and prepare for possible shifts in policy and market conditions.
If you want to discuss your mortgage plans ahead of the budget, our team of experts are here to help. Call us on 0345 345 6788 or submit an enquiry here.
