Mortgages for Business has said that it is not surprised by the Bank of England’s decision to increase interest rates by 0.25% to 4.75%.
Despite tracker and discounted rates continuing to appear attractive at present, linked as they are to the still relatively low Base Rate of 4.75%, many commentators are predicting further increases in interest rates and a continued upturn which would return base rates to 5.5 - 6% over the next 12 months.
David Whittaker, managing director of Mortgages for Business, says: “ARLA research indicates that 72% of investors currently have tracker or discounted rates. With today’s interest rate rise and further increases anticipated, these investors might well find themselves in a position where the margin between their mortgages payments and rental income begin to narrow. We would urge investors to give serious consideration to switching their mortgage borrowing to a fixed rate. Today’s interest rate rise also reinforces our belief that buy-to-let should be seen as a long term investment and not as a prospect for short term gains”.
Mortgages for Business is currently offering the following exclusive fixed Buy to Let rates:
-3.49% fixed for one year, 85% LTV, arrangement fee £449
-5.79% fixed for three years, 85% LTV, arrangement fee £449
-.15% fixed for five years, 85% LTV, arrangement fee £449
-.35% fixed for 10 years, 85% LTV, arrangement fee £449
These rates might look expensive in relation to current Base Rate, but to put them into better perspective the current market SWAP rates (the fixed rate equivalent of Bank Base Rate – 04/08/04) are as follows:
The lender’s margin is therefore very slender in comparison to margins lenders have set on tracker and discounted rates.
David Whittaker adds “These rates will not remain for very long, given the slim margins lenders have set on fixed rates and the continued general upturn in SWAP rates which the market has witnessed over the last few months. We would therefore suggest buy to let investors act quickly in order take advantage of the current fixed mortgages available.”
