On 7th November, the Monetary Policy Committee reduced the base interest rate from 5% to 4.75%, as was expected, with the annual rate of inflation having dropped to 1.7% in September - Before jumping up to 2.3% due to rising energy costs.
However, the Bank of England has said that the changes announced in the Budget could slow the pace of future interest rate cuts – particularly if the increase in employers’ NI results in price rises for consumers and inflation starts to go up again. The Bank is already anticipating that inflation will rise to around 2.5% by the end of the year.
Following the Budget, the Office for Budget Responsibility (OBR) said market expectations for the base rate in 2025 varied between 3.6% and 4.7%, "underscoring the continued uncertainty around the monetary policy outlook".
In the medium term, primarily as a result of the impact of the announced increase in government borrowing, the OBR is projecting that average mortgage rates may increase by 0.8% over the next three years, although it really will depend on inflation.
The Bank of England appears to be relatively optimistic, suggesting that thanks to slow but stable economic growth, the base rate will be around 3.6% through 2026 and 2027, which should support competitive mortgage rates from lenders.
How have the best Buy to Let rates changed since the Budget?
While it’s the base rate that has the biggest influence on mortgage interest rates, which have been steadily falling this year, the Budget prompted different reactions from lenders, with Santander almost immediately reducing many rates, while Virgin Money made small increases across its range of products.
Overall, there has been a slight increase in the best available rates since last month. According to Moneyfacts:
Pre-budget (Oct) Post-budget
- 2-yr fixed, 65% LTV 2.83% 2.97%
- 5-yr fixed, 65% LTV 3.68% 3.74% at 60% LTV
- Variable at 75% LTV 4.9% 4.9%
- 75% LTV 3.29% 3.34%
- 80% LTV 3.09% 3.58%
Although we don’t expect to see much significant movement in buy-to-let rates over the next few years, even the smallest economic changes can make a difference to lenders’ offerings, and it will be some months before the market feels the true impact of both the Autumn Budget and the recent USA election result.
To find out the latest Buy to Let rates, use our new live rate table in partnership with Embrace Financial Services.
Search for the latest Buy to Let rates
So, as always, we recommend that you take advice from an expert mortgage broker, like Embrace Financial Services, that specialises in financing investments and can keep you up to date with all the latest appropriate deals.
You can arrange an initial consultation with our partners at Embrace Financial Services at any time via our website, and if you would like to discuss how the Budget announcements could affect any aspect of Buy to Let, just get in touch with the team in your local Reeds Rains branch.
The Reeds Rains Content Marketing Team
