Bank of England holds base rate at 0.5%

Bank of England

Bank of England holds base rate at 0.5%

The Bank of England’s Monetary Policy Committee (MPC) has voted unanimously to keep its base rate at the current level of 0.5%, but with a warning that future rises could come sooner.

The Bank of England announcement suggested that the effects of inflation control, Brexit talks and a strengthening economy, could see it act faster on raising the base rate, than had been suggested in November 2017.

This may mean that landlords have less time to take advantage of the prevailing low interest rates going forwards.

When the MPC increased the base rate in November 2017, some mortgage lenders subsequently increased their mortgage interest rates, which made monthly payments more costly for landlords on affected tracker and variable rate mortgages.

Commenting on today’s announcement, the Bank of England stated:

“Since November, the prospect of a greater degree of excess demand over the forecast period and the expectation that inflation would remain above the target have further diminished the trade-off that the MPC is required to balance. It is therefore appropriate to set monetary policy so that inflation returns sustainably to its target at a more conventional horizon. The Committee judges that, were the economy to evolve broadly in line with the February Inflation Report projections, monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than anticipated at the time of the November Report, in order to return inflation sustainably to the target.

“In light of these considerations, all members thought that the current policy stance remained appropriate to balance the demands of the MPC’s remit. Any future increases in Bank Rate are expected to be at a gradual pace and to a limited extent. The Committee will monitor closely the incoming evidence on the evolving economic outlook, and stands ready to respond to developments as they unfold to ensure a sustainable return of inflation to the 2% target.”

Andrew Turner, chief executive at Commercial Trust Limited, commented:

“Today’s news will be welcomed by buy to let landlords as it makes it less likely that mortgage rates will be increased in kind.

“The buy to let market has seen record low interest rates for some time now and this news gives landlords extra time to use them to their advantage.

“For those looking to remortgage, there may not be a better time to speak with a specialist broker firm, to secure a low rate, ahead of any future increases. The MPC has reiterated once again today, that future base rate rises are likely to occur, depending on inflation performance.

“I welcome any landlord who has not recently reviewed their mortgage position to get in touch with Commercial Trust. There have been many changes in the industry that have added an additional layer of complexity to sourcing a suitable mortgage. This makes getting a correct picture of the options ever more essential.”

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.