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.
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.
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.”