What’s likely to happen to buy to let mortgages in 2024?
We take a look at the developments and trends in buy to let mortgages
The biggest determiner of mortgage rates is the Bank of England base interest rate, which has been increased over the past couple of years in an effort to combat double-digit inflation.
Between December 2021 and August 2023, it rose from a historic low of 0.1% to a 15-year high of 5.25%, where it now sits.
As a result, mortgage interest rates have been climbing over the past 18 months or so, hitting six per cent plus – a huge shock to borrowers, especially those coming off five-year fixed rates of just one or two per cent.
However, thanks to the Bank’s decision not to raise the base rate further since August, lenders have started to bring their rates down in the final quarter of 2023.
Two and five-year fixed rates for buy to let mortgages are now available from a number of lenders at under five per cent, with the potential for lower rates for properties that have an EPC rating of A-C.
With inflation expected to get back to its long-term average of around two per cent in 2025-6, we should see the Bank of England start to bring the base rate down in 2024.
Some forecasters only expect a marginal drop by the end of the year, but others, including Zoopla, believe it could go down to 4.5%.
And although it’s not predicted to get down as low as three per cent until 2027, this should still encourage lenders to offer more competitive deals in 2024 – particularly five-year fixed.
Sources:
Property checklists
Sources: Savills, NIESR, Zoopla, OBR, PwC, JLL
Capital Economics:
Five-year fixed predictions
Current mortgage rates
Very likely
Somewhat likely
Not very likely
Not likely at all
