Mortgage Rates On Hold Until 2010?

The Bank of England indicated that it would keep Britain’s base rate at its current historic low of 0.5 percent for at least one more month, thus providing buy-to-let investors additional opportunities to benefit from rates that have remained at these lows since March. According to Keshav Thukaram of SmartLandlord.co.uk, residential landlords with tracker rate mortgages will continue to reap the rewards of the low base rate. While depressed interest rates have served many buy-to-let landlords very well, market experts warn that these buy-to-let investors should use this opportunity to accumulate liquid cash or invest wisely, as the 0.5 percent rates will eventually rise, and so will their monthly interest payments on outstanding mortgages. As such, complacency could eventually put landlords at risk.

Since the UK’s economy appears to be headed towards a slow recovery, Thukaram maintains that the Bank of England’s Monetary Policy Committee is likely to raise rates during the autumn. In addition to building a reserve of liquid cash, residential landlords on tracker mortgages should also consider investing their profits in additional real estate and especially in those that offer the highest rental yields. Some buy-to-let experts, however, still predict that the base rate will remain at or around 0.5 percent until at least 2010, thus giving residential landlords with tracker mortgages the opportunity to enjoy higher returns for at least another five to six months. In fact, Capital Economics’ Vicky Redwood argued that the Bank of England was likely to keep the base rate at 0.5 percent for another year and a half.

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