Landlords need to brace themselves for the prospect of higher borrowing costs following the Bank of England’s decision to increase interest rates to 0.25%, Angus Stewart, chief executive of Property Master, the online broker for buy-to-let mortgages, has warned.
Earlier today the central bank took the decision to raise interest rates for the first time in three years despite the looming threat of Omicron to the economy.
The move came a day day after it emerged that inflation had increased to 5.1%, more than double the BoE’s 2% target.
Stewart said: “The Bank of England’s decision on whether to increase the base rate always looked to be on a knife edge but given rising inflation there was clearly a chance the decision would be to increase. It looks as if even the intervention of the Omicron variant could not throw the Bank off its chosen path.
“Now the process of rising rates has begun we should brace ourselves for further increases in the New Year.
“What we can say with certainty is the availability of low buy-to-let mortgage rates has to a large extent obscured the pressures on landlords operating in the private rented sector.
“The impact on landlords of the increasing cost of regulation, higher taxes and the removal of various tax benefits has been cushioned whilst finance costs remained low.
“As rates start to increase it will hit landlords in the pocket, and we may well see at least the smaller ones deciding buy-to-let is no longer a sensible investment for them.”
