Why Are Buy to Let Rates Increasing While Base Rate is Falling?

Just when we thought it was safe to go looking for mortgages again, this happened. Now, you’d think that if the Bank of England cut rates, mortgage rates would follow. That’s what we’ve been led to believe, isn’t it? Every time it looks like the Bank of England are about to cut base rate, the media launch into their stories about what this mean to homeowners with mortgages, and how it can only help them as rates come down. But, as I alluded to a few weeks ago, this isn’t the full story, and unfortunately real life isn’t quite so neat and tidy. Bank of England base rate and mortgage rates aren’t 100% correlated or connected. So, despite what the press may say, what you pay for your mortgage isn’t always decided by, or affected by, what the Bank of England do with base rate. That’s why I almost spluttered over my morning cornflakes the other day when one of my lenders messaged me reminding me that one of my buy to let mortgages is coming up for renewal in January, and telling me I can switch to one of their fixed rate products at a rate of around 5.5%. That in itself isn’t great now we are used to much lower rates, but the reason for my choking fit was the casual way they ended the message with news that the reversionary rate payable after the fixed rate period ends is over 8%! Yes, over 8%. I haven’t seen buy to let rates at that level since the early 2000s. If you’d like to talk to my very good mortgage broker about buy to let or any other aspect of property finance, I’ll be very happy to put you in touch. Just email me thepropertyteacher@gmail.com Here's to successful property investing Peter Peter Jones Author, property investor, ex Chartered Surveyor https://www.ThePropertyTeacher.co.uk PS. By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details, please go to: https://thepropertyteacher.co.uk/the-successful-property-investors-strategy-workshop/ And I've rewritten and updated my best-selling e-book, The Successful Property Renovator’s Workshop, will show you how to organise and undertake your renovations and guarantee yourself a profit every time – based on the more than 100 property renovations I have undertaken over the last 25 years. For more details, please go to: https://www.propertyrenovationprofits.co.uk/the-successful-property-renovators-workshop/ You might also be interested in: 63 Common Defects In Investment Property and How to Spot Them https://www.thepropertyteacher.co.uk/63-common-defects-investment-property-spot/ Goal Setting to Property Success in 5 Simple Steps https://www.thepropertyteacher.co.uk/goal-setting-property-success-5-simple-steps/ For my online video courses, please click here: The Quick Start Guide to Buying the Right (Buy to Let) Investment Property https://www.thepropertyteacher.co.uk/the-quick-start-guide-to-buying-the-right-investment-property/ The Property Portfolio Accelerator Plan (How to go from 1 to 10) https://www.thepropertyteacher.co.uk/the-property-portfolio-accelerator-plan/