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How Does the Bank of England Interest Rate Freeze Affect my Buy-To-Let Mortgage?

Posted by Todd Davison on Oct 19, 2023 1:00:00 PM

In a development that has sent ripples through the financial industry, the Bank of England recently implemented a freeze on interest rates, marking the first time in two years that the rates have remained unchanged. This measured approach comes as the Bank of England continues to stabilise the economy.


The Bank’s governor, Andrew Bailey, emphasised, ‘Inflation has fallen a lot in recent months, and we think it will continue to do so […] But there’s no room for complacency. We need to be sure inflation returns to normal and we will continue to take the decisions necessary to do just that.’ 


This pivotal decision, effective as of September 20th, holds significant promise for the housing market. 


In this blog, we’ll explore how this interest rate freeze could impact your buy-to-let mortgage, or how it might affect those considering going down the property investment avenue. 


How the interest rates freeze can boost your bottom line 


With the current interest rate standing at 5.25%, the highest since the 2008 financial crisis, the recent freeze by the Bank of England provides a rare window of opportunity for landlords with buy-to-let mortgages, offering a substantial financial advantage. 


In the face of these elevated rates, the freeze translates into substantial monthly savings on mortgage payments, which directly contributes to an improved bottom line for landlords. 


Ultimately this momentary reduction in financial costs has the potential to increase the profitability of your property portfolio. 


Attract tenants with competitive rates 


The benefits of the frozen interest rates extend beyond your bottom line. With lower financing costs, as a landlord, you can afford to offer more competitive rental rates. 


This, of course, not only makes the property more attractive to potential tenants but also gives you a greater competitive position in the rental market. 


During such uncertain economic times, every penny counts, and offering rental rates that reflect the lowered financing costs can help enormously to attract and retain quality tenants. 


Seize the moment and expand your property portfolio 


With interest rates held at bay, expanding your property portfolio in 2023 has become a feasible and financially viable option.  


Reducing borrowing costs can help pave the way for you to acquire additional properties, as well as open the door to diversifying investment across different types of properties, further spreading, and therefore reducing risk and potentially increasing your returns. 


PGI for peace of mind 


While the frozen interest rates offer a window of opportunity, it’s important to safeguard your investments. 


PGI (Personal Guarantee Insurance) on a buy-to-let mortgage is a crucial tool in protecting any personal assets you use to secure your mortgage loan, from your property to your financial interests. 


With the period of stability brought about by the interest rate freeze, it’s an ideal time to ensure your investments are shielded from unforeseen circumstances. 


Safeguard your personal assets with PGI from Purbeck 


In a time of uncertain economic stability, the Bank of England’s decision to freeze interest rates has opened a gateway of opportunity for property investors. 


Whether you’re a seasoned landlord or venturing into the buy-to-let market, the reduced financial costs offer a golden chance for increased profitability. 


However, the key to protecting your assets is preparation, which never hurts when you’re not sure what interest rates are around the corner. 


At Purbeck, we understand the increased risk property investors are facing at this current time. That’s why we offer specialised insurance tailored to cover up to 80% of the assets used to secure your personal guarantee. This extra layer of security means you can expand your property portfolio with confidence. 


Get in touch with our team today to discover how we can support your property investment journey. 

Topics: buy to let mortgages uk

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