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Interest rates could rise in the new year, warns Bank of England

Bank of England governor Mark Carney has indicated that UK interest rates could rise "at the turn of this year".

In a speech at Lincoln Cathedral, Carney said he expected rates to rise over the next three years, reaching "about half as high as historical averages", or about 2%.

Interest rates have been at 0.5% for more than six years as the UK economy recovers from the financial crisis.


An interest rate rise could deliver a blow to landlords’ finances, especially combined with the reducing of landlord tax relief.

However, Mark Harris, chief executive of mortgage broker SPF Private Clients, said Mark Carney has hinted at potential rate rises before yet they haven't happened.

“There is no need to panic, particularly as he has also said that when rates do start rising they will do so slowly and settle at around 2.5%. But inevitably rates will rise at some point so it's important for borrowers to plan ahead.

“If you are on a variable rate, and would struggle to pay your mortgage if rates rose, it is worth locking into a fixed rate.”

Adrian Anderson, director of mortgage broker Anderson Harris, agreed that now is the time to switch to a fixed rate.  “Once the money markets price in a rate rise, the cost of fixed rates start shooting up so if you want a fixed rate you may want to secure one quickly,” he said, “Five-year fixes look particularly good value but don't fix for that long if there is a chance you might move in two or three years, or you'll be hit with a hefty penalty.”

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  • Kenny Sahota

    All the more reason to get ahead of the rises and act now! Although we must put this into perspective for landlords who are left unsure about investing after reading these stories. Ultimately the raise is low, and will be gradually implemented, so best not to panic and let it put you off investing.

  • icon

    You would be a absolute fool to invest in BTL at this minute in time (especially in Scotland)

    With all the changes thats happening, interest rate rises, changes to tax relief and issues with tenants who see rent as the last thing you need to pay, I would say there are better investments elsewhere.

    In fact if you want to buy, speak with me, i am willing to sell....


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