The government must explain how it will help the private rental sector – both landlords and tenants – through the cost of living crisis.

That’s the message from Jeni Browne, director of buy to let mortgage broker Mortgages for Business.

Her comment comes after the latest Bank of England base rate rise from 2.25 per cent to 3.0 per cent, and is based on so-called swap rates – these are the agreements between mortgage lenders, and are used to offset the lenders’ risks involved in fixed rate mortgages. 

“What landlords and property investors need to remember is that swap rates influence mortgage pricing for market-funded lenders, which is good news for fixed rate products. Rishi Sunak and Jeremy Hunt’s appointments and subsequent actions have been met with approval by the money markets which has meant that swaps have started to ease down, so whilst the [Bank of England’s] Base Rate rises, we are expecting fixed rates to come down slightly over the coming weeks.

“Really, we need clear guidance from the government on how the private rental sector will be supported through this economic crisis. Tenants and landlords are both struggling with rising costs, and more needs to be done to get people through the coming months.”

Browne continues: “The 0.75 per cent increase to the Base Rate is the largest in 33 years. While this may seem overwhelming, unfortunately, it’s necessary to keep tackling inflation.

“Really, we need clear guidance from the government on how the private rental sector will be supported through this economic crisis. Tenants and landlords are both struggling with rising costs, and more needs to be done to get people through the coming months.”

While Browne may be saying that the story behind the headline base rate rise is not as bad as many fear, there is nonetheless other gloom from the Bank of England.

It is warning that we’re set for a full blown recession for all of next year and the first half of 2024

The Bank currently forecasts that interest rates will rise to 5.2 per cent in late 2023, before starting to fall back.

Inflation is forecast to hit 11 per cent by the end of this year, before dropping back from early 2023 as previous energy price hikes drop out of the calculations.

GDP is expected to fall about 0.75 per cent by the end of 2022. It’s then expected to keep falling through 2023, and the first half of 2024. Meanwhile wages will fall 0.25 per cent behind rising prices this year and 1.5 per cent behind in 2023, and the unemployment rate is forecast to hit 5.9 per cent at the end of 2024 and 6.4 per cent by the end of 2025.