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Graham Awards


Should landlords pay early redemption fees to avoid mortgage misery?

The latest Bank of England base rate increase will serve only to increase the pain on landlords, it’s been claimed.

This is the fifth rise in successive months and takes base rate to 1.25 per cent.

Angus Stewart, chief executive of online buy to let mortgage broker Property Master, says: “All the members of the Bank’s Monetary Policy Committee voted to increase the base rate last month, and three of them went for a half point rise then. Since that time there has been no let-up in the inflationary pressures we have seen in the economy so it looks as if the Bank has decided to continue to slam on the brakes.


“Our own tracker of the buy-to-let fixed rate mortgage market shows landlords even before this news are paying up to £133 per month more for a typical mortgage.  

“Given that the Bank of England’s own forecasts have talked about the base rate rising to 2.5 per cent by the middle of next year there is a lot more to come. For some landlords it may well be worth paying an early redemption fee now to exit their current fixed rate if it is already near the end and lock in a deal now before rates move upwards again.”

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    As most of the current inflation is caused by global events completely beyond the control of anyone or anything in the UK I don't understand how increasing interest rates is supposed to help control inflation. How is causing people to default or pushing companies into bankruptcy in any way going to help?

    In terms of getting a cheap mortgage now, that ship has sailed. Two or three months ago there were some good deals but they are a distant memory. It probably will get a bit worse but unless the Bank of England want wholesale repossessions they will eventually have to come up with a different inflation policy.


    The only way to handle inflation is to let it rip as it did in the 70s, when costs increase we all pass those costs on to the end user, the heating engineer that might have charged us £70 to service a boiler last yr will be charging us £80 this yr, and £90 next yr, that all has to be factored into rent increases.
    Talking about the 70s, remember that long hot summer of 76, I was 22/23 and working as a HGV fitter for the local nationalised electricity company, my take home pay was £30 per week which was good money then, many were taking home £20-25 per week, wonder what a HGV fitter takes home now ? at a guess £500 per week, that's how inflation works, there's no stopping it


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