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Landlords gain from interest rate cut

5 August 2016 / By: / Under: News

Landlords in London could see the value of their property portfolios rise after the Bank of England cut interest rates to 0.25%. 

Value of rental homes set to riseWith the base rate at its lowest ever level in the Bank’s 322-year history, mortgage payments are set to fall but returns on savings will suffer.

This means more investors could enter the buy-to-let market, increasing competition for homes within the M25.

The Bank of England reduced interest rates as part of a £170bn package of measures designed to prevent a recession following the Brexit vote.

The decision to cut rates was approved unanimously by the nine members of the Monetary Policy Committee.

To super-charge the impact of the interest rate cut, a new system of cheap loans for banks was also unveiled. The Term Funding Scheme will allow banks to borrow directly from the BoE as it prepares to print another £100bn of new cash to finance the scheme.

This is the first cut to interest rates since March 2009, but Mr Carney added the MPC was willing to take rates as close as they could go to zero in the fight to protect the UK economy.

However, any further reduction in the base rate is unlikely to be announced before the winter.

The MPC meeting on Thursday 4 August was the last before it moves to only meeting eight times a year, meaning that it is not scheduled to meet again until 3 November.

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City AM


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