Skip to content

25 Sep, 2023

Interest Rate Stays a 5.25%: What Does This Mean for Buy-to-Let Investors?

Want to hear about the best UK investment deals before anybody else? Sign up to our mailing list for information on lucrative investment opportunities, must-know offers, and more.

    Unmoved Interest Rates: Good News for Buy-to-Let Investors?

    In a surprise move, the Bank of England has decided against raising the base interest rate.

    Until September 2023, the Bank of England had raised the base rate 14 times in a row.

    Earlier in the week, inflation dropped from 6.7%. However, experts predicted the Bank of England would raise rates again.


    Wooden blocks with percentage sign and arrow up, financial growth, interest rate increase, inflation, high price and tax rise concept

    Claim Your Free Buy to Let Costs Guide

    From management fees to service charge, there are a few costs to consider when investing in buy to let property. Download our free guide today on buy to let costs and get up to date with the latest fees.

    What Does the Latest Interest Rate News Suggest?

    The Bank of England’s decision not to raise the interest rate suggests that rate increases may have peaked.

    The reasoning is that higher interest makes people less likely to borrow money. Therefore, households will limit their spending, and companies will be less likely to raise prices.

    However, the Bank of England needs to show caution. If rates rise too much, people will limit spending to the point where economic growth slows and companies struggle to survive.

    According to the Bank of England Monetary Policy Committee, inflation had fallen to 6.7% in August – much faster than predicted.

    The committee also suggested there were signs higher rates were harming the nation’s economy.

    Unemployment has risen slightly, and economic growth has been weaker than forecast.

    However, the MPC also said rates would continue to be “sufficiently restrictive for sufficiently long” until inflation falls to the Bank of England’s 2% target. The economy is not expected to reach that target until 2025.

    While the interest rate stall is promising, further rates may be required if prices begin accelerating in the future. This news is quite important to property investors all over the world, who are monitoring financial markets closely.

    United kingdom housing market, interest rates increase and inflation concept

    Unit A-401 Back on the Market!

    Completed Manhattan apartment back on the market in our sold out, award-winning development with £9,097 Net rental income. Move quickly to secure this unit.

    How Did Experts React to Unchanged Interest Rates?

    Speaking on unchanged interest rates, Chancellor Jeremy Hunt said:

    “We are starting to see the tide turn against high inflation, but we will continue to do what we can to help households struggling with mortgage payments.

    “Now is the time to see the job through. We are on track to halve inflation this year, and sticking to our plan is the only way to bring interest and mortgage rates down.”

    Question mark on a wooden house. Cost estimate. Solving housing problems, deciding to buy or rent real estate. Search for options, choice of type of residential buildings. Property valuation

    Join Our Mailing List

    Sign up to our mailing list today for information on the latest buy to let deals, new property launches, expert insights, and more.

      How Have Interest Rates Changed in Recent Years?

      Following the 2008 financial crisis, UK interest rates fell to some of the lowest levels in history.

      Further cuts followed the UK Brexit vote in 2016 and the Covid pandemic, bringing the rate to 0.1%.

      However, rates grew toward the end of 2021 and accelerated when Russia invaded Ukraine, sending fuel and food prices soaring.

      This week’s decision to stop raising interest rates marks the first meeting since November 2021 that the MPC has decided against an interest hike.

      House models with up arrow

      Get Your FREE Buy to Let Investment Guide

      Contains actionable tips for property investors to help your investment portfolio thrive! Download today for a free copy.

        How Have Rising Interest Rates Affected the Property Market?

        When interest rates increase, the housing market usually slows down.

        When interest rates rise, so do mortgage interest rates, which reduces demand for property investment and leads to a price drop.

        On the other hand, when interest rates fall – and it looks like we may finally be heading in that direction again – mortgage rates become cheaper. In turn, demand for housing increases and property values eventually go up.

        When inflation figures decreased in August, lenders reacted by lowering mortgage rates. For instance, Moneyfacts reports that two-year fixed-rate deals fell to 6.79% – from 6.81% – when inflation started to decrease. In addition, five-year fixed-rate deals dropped 0.02% to 6.31%. This was the first time both rates fell together since May 2023.

        Inflation forecasts predict the rate will fall to 4-5% by the end of the year. This would see a gradual decline in fixed-rate prices as the market’s direction becomes clearer over the next couple of months. This should make it for people wondering what to invest in right now in 2023.

        While it is too early to say whether mortgages will become cheaper in the long term, the September interest rate and inflation rate are cause for cautious optimism. If numbers continue to decline, buy-to-let investors may see mortgages become even more affordable over the next 12 months.

        This news was prepared by the property investment company

        Golden real estate or home property investment on golden background with residential finance economy. 3D rendering.
        Avatar photo

        Dale Barham

        Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.

        Why Choose RWinvest?

        Here are three reasons to choose RWinvest for your next UK property investment.

        We have over 2,000 five-star Trustpilot reviews

        Multiple Award Icon

        We're a multi-award winning investment company

        We offer investments in the best buy to let areas

        Contact Us

        Contact Us

        Want to Get in Touch?

        Fill in the form to contact us today and a member of our award-winning property team will be in touch to help.

          UM Google Review

          I recently had the pleasure of purchasing a flat from RWinvest, and I must say that my experience has been nothing short of exceptional. From the initial consultation to the final handover, every aspect of the process was handled with utmost professionalism, transparency, and efficiency.

          Umut Mutlu

          Google Reviews Logo
          AB Trustpilot Review

          I want to express my sincere appreciation for the outstanding service I've received during my property purchase. The entire process, from start to finish, has been remarkably smooth and efficient. Furthermore, I'd like to commend the excellent service provided by the team. Your commitment to ensuring a five-star customer experience truly shines.

          Angelina Bulgakova

          PG Trustpilot Review

          Like always it has again been a great experience with RW Invest. Chloe from the client care team was really helpful. She dealt with my queries very efficiently and professionally and supported me very well all the way through to the exchange.
          Andy from sales team was amazing as well in helping me shortlisting and finalising the unit I wanted to buy. Overall great experience

          Prab Gill

          Arrow left
          Arrow right