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Interest rate hold: Will landlord mortgage costs now go down?

mortgage interet rate

The Base Rate used by many lenders to determine mortgage costs for landlords is to be held at 5.25% for the fourth time in a row, the Bank of England’s Monetary Policy Committee has decided today.

This decision, which was via a split vote among the nine ‘great and good’ members of the committee, means mortgages will continue to be expensive in the short term for landlords coming off more lower fixed rates or seeking fresh loans.

This is because, the MPC believes, monetary policy will need to remain ‘restrictive’ for sufficiently long to “return inflation to the 2% target sustainably in the medium term, in line with the MPC’s remit”.

Or in other words we’re not out of the woods yet, although the committee notes that business confidence and the overall economic strength of the UK appears to be improving.

Landlords and homeowners are also benefitting from lower mortgage rates across the board as lenders have fought for market share with more generous deals after months of sky-high rates following the Liz Truss/Kwasi Kwarteng debacle.


Gavin Richardson (pictured), MD at broker MFB, says: "Despite the recent fluctuations in SWAP rate pricing, maintaining the Base Rate at its current level is the right move.

"Industry experts and economists remain confident that we can expect at least two reductions to the Base Rate this year, with the first as early as June. Current inflation forecasts support this confidence, showing further decreases to a more manageable level.

"Of course, geopolitical activity in the Middle East may impact the UK’s money markets; however, as it stands, we’ve not felt a significant economic impact of this political unrest.

"Over the past month, we have seen both Highstreet banks and specialist lenders reduce pricing to offer more competitive mortgage products. We expect this will start to slow as lenders carefully watch SWAP rate activity, so for landlords approaching their remortgage, now is the time to review your options. As always, working with a whole-of-market mortgage broker gives you the best opportunity to find the right deal."


“The initial aggressive rate cuts by lenders since January and before have been sparked by the market's bet on stabilised borrowing costs,” says Karen Noye, mortgage expert at Quilter (pictured).

“This has evidently led to a mini war of rates, benefitting consumers but also revealing the market's sensitivity to policy signals.

“Without the certainty of a further cut it seems unlikely that mortgage rates can fall much further.

“The rise in swap rates — an essential benchmark for pricing fixed-rate mortgages — signifies mounting pressures that could reverse the recent trend of falling mortgage rates.

“This scenario not only affects borrowers but also has broader implications for housing market activity and, by extension, the economy.”


Mark Harris (pictured), chief executive of mortgage broker SPF Private Clients: “What is interesting is not so much the decision itself but the sentiment behind it; last time three members voted for a rise and six for a hold, whereas this time six wanted no change, two wanted an increase and one member a rate reduction. This suggests we are nearing closer to the first reduction.

"We expect base rate to be at 4 per cent or even less by the end of the year, assuming inflation also continues to move towards its 2 per cent target.

“This would necessitate around three or four interest rate cuts, which would come as welcome news for borrowers struggling with affordability.

"Lenders continue to reduce their mortgage rates for both new purchases and those remortgaging, increasing the choice for borrowers at more palatable rates.

“Lenders are keen to lend and will want to do more business after a disappointing 2023, which is likely to mean further rate reductions, although deals are not hanging around for long.”

Jeremy Leaf (pictured), a north London estate agent and a former RICS residential chairman, says: "Talk is of rates falling during 2024 but by how much, how fast and when? Inflationary pressures are abating, while wholesale energy prices have fallen significantly. The Middle East remains a risk, while the labour market continues to ease and wage growth is projected to decline further in coming months.”

“The question borrowers are weighing up is whether the recent reduction in mortgage rates is just the beginning, or should they wait longer before taking the plunge?"


Matt Smith (pictured), Rightmove's mortgage expert adds: "As painful as rate rises have been for many people, there are increasing signs that Base Rate rises are having a real impact on the economy, and inflation is heading in the right direction.

"Another hold in the Base Rate today also shows that the Bank will also be cautious not to overshoot Base Rate rises, and will be keen to maintain the currentstability."

Rightmove's own data shows that the average five-year fixed mortgage rate is now 4.65%, down from 4.81% a year ago and the average two-year fixed mortgage rate is now 4.99%, down from 5.13% a year ago.


Bank of england
Mortgage interest