Bank increases base rate – again
The Bank of England has once again increased the base rate, this time by 0.25% to 5.25%.
The Monetary Policy Committee was split in its voting. Six members voted for the quarter-point hike, two for a half-point, with only one voting not to raise at all.
This is the 14th consecutive increase in a row, and means landlords’ mortgage payments have increased by almost 240% since December 2021, according to the National Residential Landlords Association.
Ben Beadle, chief executive of the NRLA, said: “With landlord profits at their lowest level for 16 years, the vast majority are doing all they can to protect tenants from the impact of growing mortgage rates. However, without government action, renters face a bleak future as growing costs lead to a loss of more rental homes from the market.
“Analysis for the NRLA has found that 735,000 rental properties could be lost across the UK if interest rates peaked at 5%. With an average of 20 requests to view each available home to rent already, today’s announcement will only worsen matters.”
The association called on the government to scrap tax changes like the elimination of tax relief to boost supply.
It also suggested that housing benefit rates should be unfrozen so vulnerable tenants receive assistance during this challenging period.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “A small rise in rates had been widely expected but the pace and size of these increases is almost as important. Lenders have already allowed for another uplift in rates to their mortgage pricing and there are hopes that mortgage rates should start edging downwards.
“While a quarter-point rise won’t be welcomed by borrowers on variable rates, it is a positive in a way as rates could have risen by more than that, as they did at the last meeting.
“Confidence and expectation that rates are at, or near, their peak make such a difference to homebuying decisions. We have already seen quite a bit of talk about rates coming down, so it is clear to us that many are sitting on their hands before making any big buying decisions.”