The ‘Rishi effect’ has started to impact mortgage rates just a day after the new PM was announced.
As former Chancellor Rishi Sunak moves into number 10, some lenders have announced plans to drop their rates from tomorrow; Coventry Building Society is reducing its new business five-year fixed 75% LTV rates and new buy-to-let five-year fixed 65% LTV standard BTL rates while Santander is cutting selected new business residential fixed rates by between 0.05% and 0.50% and all buy-to-let fixed rates by 0.05%
Accord Mortgages is also reducing rates across its new business residential product range, up to 0.35% for 75% and 85% LTV product rates, for 90% LTV product rates by up to 0.53% and for 95% LTV product rates by up to 0.52%.
Daniel Lee (pictured), principal at Total Landlord Mortgages, says these are big reductions which could snowball.
“For the buy-to-let market, the biggest issue is the stress test, and The Mortgage Works has now just lowered this for new applications which is really good news and a positive sign,” he tells LandlordZONE.
Lee says it’s not the current 2.25% base rate which is the problem, but the banks setting rates of up to 7%. He adds: “As long as there’s confidence in the market, I believe they will lower interest rates. I’m sure we’ll see the base rate raised next month – and if it’s less than 1%, this could be seen as a positive sign.”
Lee believes that by March 2023, the investment landscape will look more positive. “In the context of interest rates in the last 20 years, 3% is not that high. For landlords, it’s still all about not panicking and holding tight.”
Last month, lenders pulled hundreds of fixed buy-to-let mortgage products in response to the government’s mini-budget. Many have reintroduced variable rates in the last few weeks.