One of the most respected financial organisations is warning landlords and the rest of the property industry that markets are now betting that the Bank of England base rate will hit 5.0 per cent.
It’s currently 4.25 per cent but the John Charcol national mortgage broker says the Bank of England believes it must take more action to cool spiralling prices.
This prediction comes after figures released by the Office for National Statistics stated that inflation fell less than expected to 10.1 per cent last month
A John Charcol statement says: “Expectations were to see the Consumer Price Index rate of inflation fall to 9.8 per cent from 10.4 per cent in February. Instead, the figures revealed the seventh month in a row of double-digit inflation.”
Grant Fitzner, ONS chief economist, says of the stubbornly high inflation rate: “The main drivers of the decline were motor fuel prices and heating oil costs, both of which fell after sharp rises at the same time last year.
“Clothing, furniture and household goods prices increased, but more slowly than a year ago.
“However, these were partially offset by the cost of food, which is still climbing steeply, with bread and cereal price inflation at a record high.”
The next meeting of the Bank of England’s monetary policy committee - which sets base rate - is Thursday May 11.
Meanwhile business consultancy Hargreaves Lansdown is warning that savings rates - which have recently risen as a consequence of BoE decisions - are now suggesting that the UK could, after all, dip into recession.
Emma Wall, head of savings at Hargreaves Lansdown, says: “The best rate for a 12 month savings account is higher now than that of a five-year fixed rate savings account according to Moneyfacts data. This is great news for savers only wanting to lock their money away for a short period – but if flips interest rate logic on its head. Normally, the longer the term the better the rate, you’re compensated for your loyalty.
“The yield curve normally plots low for one-year fixed rate, ticking upwards from bottom left to top right. This shape usually indicates that we are in a period of economic expansion, optimism abounds. An inverted yield curve is a line that sweeps downwards – top left to bottom right, and indicates the opposite, a period of economic contraction – a recession. A flat line usually means change is afoot!
“Currently plotting the best savings rate for one, two, three and five year accounts the line sits somewhere between all three, trending slightly down towards the five year.
“This indicates economic uncertainty – the outlook for how the Bank of England will next act on rates is mixed.”
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So we will be back to where it was when I was buying with Commercial loans 5% base + 3% before BoE were given control and kept lowering rates which abolished savers, then came the Woolwich & others followed with B 2 L, I know how I suffered with the old normal, maybe this its going to be the new normal, anyway the Concrete mixer can’t stop.
How are people that bought with low interest rates supposed to cope now and at the same time be hit with a load of Regulatory requirements incl’ licensing and Energy Performance up grades,
it seems there’s a concerted effort to destroy the current sector.
They are prepared to introduce all those laws at a time people were already struggling it don’t bear thinking about.
Roll on London Mayor Khan wants more unearned Billions with ULEZ from the life blood of the Country £12.50 a day if they dare turn the key. This is the same guy that allowed sub-standard Road Surface material / Asphalt to be applied to London Roads under his watch, now ravelling away and full of potholes after only a few years instead of 30 years what a moran and he’s in charge of us, now interfering with Private Sector Housing and thinks it should be Capped is he for real at a time when people can’t meet their current commitments.
We may struggle with our businesses but spare a thought for home owners who bought at high prices with low rates - they will be using their homes.
Agree, once those sub 1% 2 yr fixes end this year … 😱😱 they are in a world of pain 🆘🆘
Hopefully those owner occupiers hit by a trebling of interest rates will make as much noise as those tenants who have by and large had real term rent reductions after real inflation rates are taken into account.
The Government will need to listen to disgruntled owner occupiers who are much more likely to vote Tory than the tenants they're foolishly trying to protect and woo.
Its well overtime that we get an answer from Gov, to the question, ‘ Where are all the homeless renters and ex homeowners going to go’?
Shelter could afford to accomodate a few, (but don’t hold your breath!) and the rest?
The days of cheap money are over, interest rates normally were between 5 & 6%
This article certainly galvanized me into leaping out of bed this morning and submitting a couple of remortgage applications before rates rise.
Me - I'm paying them off!
Wise move Tricia
Tricia - I'm paying off one next week and then hopefully another one in September purely so it's one less hurdle in case I need to sell any. The CGT would be too eye watering to sell some of my longest held houses, so I may as well max out the borrowing on them to fully clear the borrowing on some of my more recently bought properties with lower CGT liabilities. The mortgage rates available this week are slightly less horrific than they were a couple of months ago and I'm in the remortgaging time window, so I'm trying to it's grab it while it's there.
If things perk up and I decide to expand I can always remortgage unencumbered houses later.
Not much balance in this article, as other 'Experts' predict rates will go down once inflation starts to come down.
According to the ''experts'' inflation was supposed to be on it's way down now, however it's still up there at over 10%, I don't see it coming down anytime soon
I cannot see inflation suddenly dropping to their magical 2%….. not a chance, so rates will stay around where we are.
I'm with you on this one Chris. Inflation though is slow to come down, but down it will go.
That said, I do not see interest rates falling that quickly. The useless B of E will hold rates until they see a better situation ahead. Of course this will be the wrong move and this country will again go into boom and bust.
We need a new plan. In France you fix the interest rate for the life of your mortgage. Makes sense to me!
I'm fortunate as I've paid off all my mortgages apart from one which is a holiday let. I'll be paying it off in July from the proceeds of a flat which concludes next month. I feel sorry for those who are just managing to make ends meet and will really feel the effects of higher mortgage rates. I will never take another buy to let mortgage out. Sell sell sell is my plan... I'm escaping the madness. Landlords have no representation and we just seem to get shafted on a regular basis and say thank you for it. This game is not for me any more.
Shane, just catching up on reading some of the comments busy and long weekend.
I agree we are not represented or poorly represented we can’t say 100k member Organisation is Representative of 2.6m landlords whether our fault or not something seriously wrong here we are outcast and yes always shafted, we are treated deliberately unfairly by comparison to other Landlords using Companies they are paying far lower tax rates and exempted from HMO’s in Blocks of more than 3 if that’s the case as I have read it.
It’s interesting to note people that house no one are glorified, have the ear of Government, classed as Industry Experts, exempt from all the Housing laws obviously as they don’t supply any by are rewarded with Charity Status good that isn’t it.
Long term landlord are particularly disadvantaged and hated the most, instead of getting Rewarded for the years of Service and loyalty get screwed and held to Ransom until Death do us part, no exit plan allowed, no taper relief / indexation / inflation taxed as profit. We are not Represented or treated fairly at all.
We have 2 fixed rate mortgages coming up due towards the end of the year. Both in company names, so fixed at higher rates almost 5 years ago. Both totals less than £50k, so they will be paid off. All others were re-mortgaged at fixed rates for 5 years end of last year. The minimum interest rate is 1.79%, still has about 20 months to go and others have almost 5 years to go and are either 2.35% or 2.65%. One small loan fixed at 3.10% without any fees for 5 years. The properties that has no mortgages will be sold off in the next 1 to 4 years to invest elsewhere and/or reduce other loans in 4.5 years. I have always had interest only mortgages until 6 years ago, when I started to reduce or pay off loans and sold some properties. This allowed me to spend more on travelling, going out and entertainment. I can always go back to some sort of work if necessary. So I am not worried about interest rate rises. However, the BOE has a totally deem view of the economy. The inflation is not going to reduce at all as the cause of it is not consumer high spending in the shops. Maybe the government should ask the credit card companies to stop giving credit cards. People should not spend what they don't have. The economy is going to worsen for majority of the people.
Vibha
I think you mean that the Boe has a dream view. Of which l agree. Inflation is very hard to get rid of and with the influx of people into this country they will create an insatiable demand for goods, services accomodation, food,water,education, medical treatment etc etc. This will increase inflation.
Higher interest rates means the government can now sell more bonds at a higher rate to investors so the government can generate more money in order to purchase more arms from BAE and others, to send to Ukraine to fuel the war there. Me and you are paying for this war to continue so, Shell, BP, Texaco, Chevron and Esso can make trillions.
Ferey, the Russians moved with incredible speed and nearly took Kyiv. Once that was taken, what next, well how about a quick spin down the autobahn to the channel ports.
Further arms become obsolete and decay, so using up our weapons stock on reality dosent really cost. Unfortunately said weapons are not being replaced which is a serious proble. Further the main profiteers are the Americans and the Germans since we have shut so much industry, (a primary cause of inflation).
Edwin I do not wish to change Landlord Today to a political debate platform. There was a Minsk agreement in 2014 that Russia would respect Ukraine borders provided that Ukraine does not join NATO. Which made sense. Similar to missile crises of 1962, Russia would never allow Ukraine to become part of the NATO which subsequently makes it a nuclear sight at its borders. Then the Western propaganda headed by Boris Johnson started that if Ukraine wishes to join NATO, as a sovereign nation, they can do so". No doubt that Poutine is a ruthless dictator. But Russia was forced to take measures to protect those Russians that live in the East of Ukraine and persecuted by the Ukrainians. Let not forget that these Ukrainians sided with Hitler during WW2. going back to inflation. Inflation is a stealth tax that governments have at their disposal.
Ferry
You seem to forget that Russia took Crimea in 2014, in spite of guaranteeing its independence. Further because of the agreement with Russia, Britain and America Ukraine gave up it's atomic weapons. Only Britain honoured this agreement. And as for a political platform, PRS landlords are being used as a political tool, very useful spending someone elses assets, no need to raise taxes.
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