Landlords urged to secure a new mortgage rate despite falling inflation

MFB tells landlords to secure a new rate as early as possible following this week’s inflation data.

Related topics:  Finance,  mortgages
Rozi Jones | Editor, Barcadia Media
18th August 2023
House Prices Down
"As long as inflation continues the same downward trajectory though, we forecast the next rise will be the final increase this year."

Following the latest update on inflation, specialist buy-to-let broker MFB says landlords approaching a remortgage should still look to secure a new rate as early as possible.

Earlier this week, the ONS published the Consumer Price Index (CPI) figures for July 2023 showing inflation reached 6.8% in July, down from 7.9% in June.

Inflation peaked last October, around the time of the failed Truss-Kwarteng mini-budget, at 11.1%.

In June, there was an unexpectedly significant drop in inflation, down from 8.7% in May to 7.9%. Despite this fall in inflation, continued high growth in prices and earnings led to a Bank of England Base Rate rise earlier this month.

MFB said the latest inflation figures will act as a barometer for the Monetary Policy Committee (MPC) when it meets to review the Base Rate on the 21st of September.

The MPC has increased the Base Rate fourteen consecutive times, rising from an all-time low of 0.1% in December 2021 to 5.25% following this month’s increase.

Gavin Richardson, managing director of MFB, said: “I expect further falls to the overall inflation rate for the rest of 2023 driven, primarily, by falling energy prices. I think inflation will fall as low as 5% in the final quarter of this year.

“But the Bank of England is still going to increase the Base Rate in September — probably by a further 0.25%. So if you’re approaching your remortgage, while I expect inflation to ease, I recommend securing a new rate as early as possible; for some lenders, this can be up to six months before the end of your Early Repayment Charge (ERC) period. If mortgage interest rates decrease, many lenders allow you to switch to a more competitive product should one become available before you complete. Either way, you’ll have financial security and confidence that you’re on the most suitable mortgage for your circumstances.

“If you are on a tracker or variable mortgage that follows the Base Rate, you have time to secure a fixed-rate deal before the next MPC meeting. If you wait, you will see your mortgage repayments increase once again following the Base Rate rise. It’s worth exploring your fixed-rate options with a broker to see how much you could save on your monthly payments.

“As long as inflation continues the same downward trajectory though, we forecast the next rise will be the final increase this year.”

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