The BTL industry has reacted positively after the Bank of England’s monetary policy committee voted to hold rates.
Despite four members voting for a 25bps rate cut, the majority of five voted to maintain the bank rate at 4%.
In its reasoning, the Bank of England argued that “CPI inflation is judged to have peaked” but added that more evidence is needed around its future path.
Ben Thompson, deputy CEO at the Mortgage Advice Bureau, was not surprised by the vote outcome with the MPC pausing its streak of quarterly rate cuts.
“While the headline rate may feel elevated, the reality on the ground is much more encouraging,” said Ben, who expects a stable rate environment for the time being.
“Three years of economic adjustment have delivered a much brighter picture: house price growth has flattened, wage growth in real terms is on the rise, and borrowing power is significantly better than it was 12 to 24 months ago.”
Also seeing positives in the underlying reality is Steve Cox, chief commercial officer at Fleet Mortgages, who sees an “optimistic story” in mortgage pricing trends.
“Regardless of the MPC’s decision, BTL lenders have been cutting rates as swaps and funding conditions improve, and this provides an opportunity for advisers and landlord clients to engage now rather than wait,” said Steve who pointed to the Renters Rights Act as increasing the need for financing need for landlords.
“Whether it’s meeting new minimum standards or adjusting to tenancy reforms, financial planning is essential, and any savings achieved through more competitive mortgage pricing will help landlords manage these pressures,” he added.
“Lower mortgage costs won’t just ease affordability, they’ll support long-term investment in professional, compliant portfolios.”
Additionally, some commented on the timing of the Bank of England’s vote and pointed out that uncertainty is still rife ahead of the Autumn Budget scheduled for 26th November.
“What kind of tax rises and who they would impact the most is still unknown, as is any insight into other measures she will announce,” said Charles Resnick, chief finance officer at Afin Bank.
“As a result, economists and the markets are holding their breath, so a further base rate change in December can’t be ruled out, although it is looking more likely for next year.”
As a result, the situation could change after this, and some are not ruling out a return from the Bank of England to its rate-cutting ways before the year ends.
“We believe there is a strong chance that the MPC will deliver borrowers an early Christmas present by cutting rates at next month’s meeting, especially if economic growth continues to disappoint,” said Rob Clifford, CEO at Stonebridge.
“That would likely intensify the recent price war being waged among lenders, leading to further reductions in mortgage rates and further boosting consumer confidence.”
