21st
Dec 2021
For the first time in three years the Bank of England has increased interest rates to ‘peg back’ the surging house prices.
The BoE has increased the rate increase from 0.1 per cent to 0.25 per cent after finding house prices are increasing far quicker than ten years ago, this is despite downward forecasts of apparent consumer spend being less because of the Omicron variant.
Landlords can now expect to be ‘hit’ by higher mortgage costs.
A spokesperson for an online mortgage company, says: “It looks as if even the intervention of the Omicron variant could not throw the Bank off its chosen path. Now the process of rising rates has begun we should brace ourselves for further increases in the New Year.
“What we can say with certainty is the availability of low buy-to-let mortgage rates has to a large extent obscured the pressures on landlords operating in the private rented sector.
“The impact on landlords of the increasing cost of regulation, higher taxes and the removal of various tax benefits has been cushioned whilst finance costs remained low. As rates start to increase it will hit landlords in the pocket and we may well see at least the smaller ones decide buy to let is not an investment for them.”
The Bank's Monetary Policy Committee (MPC) voted in favour of the increase by eight to one.
The lowest recorded level since March 2020 of 0.1 per cent was introduced because of the ongoing Covid variants.
Many economists were awaiting the inevitable rate increase from the MPC's meeting in November which was decided against but at the latest committee meeting held in the past week, it voted to go ahead with the rate increase, contrary to analysists hoping this would be delayed because of the new Covid strain.
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