Buy-to-let broker MFB has urged landlords approaching a remortgage to secure a new rate as early as possible.
Earlier this week, the ONS published the Consumer Price Index (CPI) figures for July 2023 showing inflation reached 6.8% in July, down from 7.9% in June.
Gavin Richardson, the managing director of MFB said: “I expect further falls to the overall inflation rate for the rest of 2023 driven, primarily, by falling energy prices. I think inflation will fall as low as 5% in the final quarter of this year.
“But the Bank of England is still going to increase the Base Rate in September — probably by a further 0.25%.
So if you’re approaching your remortgage, while I expect inflation to ease, I recommend securing a new rate as early as possible; for some lenders, this can be up to six months before the end of your Early Repayment Charge (ERC) period.
“If mortgage interest rates decrease, many lenders allow you to switch to a more competitive product should one become available before you complete. Either way, you’ll have financial security and confidence that you’re on the most suitable mortgage for your circumstances.”
Inflation peaked last October, around the time of the failed Truss-Kwarteng mini-budget, at 11.1%.
Jeremy Hunt’s quick amendments to the budget helped curb inflation, ease mortgage interest rates, and restore confidence in the money markets.
In June, there was an unexpectedly significant drop in inflation, down from 8.7% in May to 7.9%. This is the lowest inflation has been since March 2022.
Despite this fall in inflation, continued high growth in prices and earnings led to a Bank of England Base Rate rise earlier this month.
Mortgages For Business said the latest inflation figures will act as a barometer for the Monetary Policy Committee (MPC) when it meets to review the Base Rate on the 21st of September.
The MPC has increased the Base Rate 14 consecutive times, rising from an all-time low of 0.1% in December 2021 to 5.25% following this month’s increase.
Richardson added: “If you are on a tracker or variable mortgage that follows the Base Rate, you have time to secure a fixed-rate deal before the next MPC meeting.
“If you wait, you will see your mortgage repayments increase once again following the Base Rate rise.
“It’s worth exploring your fixed-rate options with a broker to see how much you could save on your monthly payments.”
