As the Bank Of England again raises interest rates, Property118 got the reactions of several property industry experts.

Interest Rate Increase

• The Bank of England has raised the interest rate to 5.25%.
• This is the 14th time in a row they’ve done this, and it’s the highest rate since April 2008.
• The increase is to help with rising prices in the economy.

What Does It Mean for Renters and Landlords?

• Landlords who have ‘buy to let’ mortgages might raise rents.
• Those needing to remortgage will face higher repayments.
• The average increase in monthly payments for these types of mortgages could be around £275 by the end of 2025.

Impact on Rental Market

• Landlord profits are at their lowest in 16 years.
• If interest rates peak at 5%, 735,000 rental properties could be lost across the UK, making it harder to find a rental home.
• Some experts are calling for government action to help renters and landlords through tax changes and assistance for vulnerable tenants.

What Are Property Experts Saying?

• Some believe the rate increase was expected, so it has already been considered in mortgage rates.
• Others think that the interest rate should have been raised even more to control inflation quickly.
• There are concerns about the sustainability of the buy-to-let sector, with potential for landlords to raise rents or sell properties.
• Mortgage approvals are still below pre-COVID levels, and high interest rates may further reduce buying power.
• However, not all regions will be affected equally. Higher-value markets in Southern England may feel more impact, while the north of England and Scotland might see continued house price rises.
• There are also expectations that mortgage rates might start to fall in the coming weeks.

Homeowners and Buyers

• Homeowners with variable mortgages and overleveraged buy-to-let investors will be particularly impacted.
• Rising interest rates are causing buyers to be more cautious, but activity may pick up as they adjust to the new rates and more products come to the market.

Bottom Line

• The repeated interest rate increases are causing concerns for borrowers and a feeling of uncertainty.
• Some believe it’s time for the Bank of England to pause and see the effects of these rate increases before continuing.
• The direct impact for a borrower with a specific mortgage (e.g., £250,000) could see monthly payments rise from £1,390 to £1,425 due to this latest increase. Cumulatively, payments could have risen from £943 to £1,649 since December 2021.

In short, the interest rate increase will likely have a complex and varied effect on the UK property market. While it may lead to increased mortgage payments and potential rent rises, there’s also optimism that the market will adjust, and some regions may be less affected. If you’re considering investing in property or already own property, it might be a good idea to consult with a financial advisor to understand how these changes specifically impact your situation.