Landlords keeping an eye on interest rates payable on their property investments have seen the Bank of England keep the base rate on hold at 0.5 per cent for June.
The rate has remained unchanged for 15 consecutive months and there is also no change to the Bank’s quantitative easing (QE) programme, which remains at £200 billion.
Rob Bruce, Head of Residential Research at Jones Lang LaSalle, commented: “Consumer confidence is weak and mortgage lending remains at a very rationed level.
“Lending levels once again lag the six-month average. Altering the base rate at present would damage the fragile recovery in house prices."
He added: “While base rates are one-tenth of the level seen two years ago the standard variable rate at which mortgages are available represents, on average, 60 per cent of the rate two years ago.
“This disconnect in the cost of borrowing twinned to uncertainty in the future around economic stability leaves lending at a depressed level."
However, Bruce said the UK continues to attract international investment, with almost three-quarters of the buyers interested in Prime Central London properties coming from overseas.
While the devaluation of the Euro has put pressure on continental buyers, property investors from the US, China and the Far East are still keen.
Simon Gammon, head of Knight Frank Finance, said: “The decision by the Bank of England’s Monetary Committee to keep the base rate on hold at 0.5 percent for the 15th month running was in line with the market’s expectations.
“The longer term view is that interest rates will rise considerably from their current record low, and seriously considering a fixed rate for your mortgage now is very important.”
Andy Cuthbert of dot Financial Services believes the Budget on 22 June is likely to detail a more responsible fiscal policy, including huge public spending cuts in a bid to reduce the public debt, so there is a need to keep interest rates low in order to support this.
He said: “There should be a certain level of policy caution due to increased uncertainty over financial stability in the euro zone.
“With interest rates expected to return to below target within the next few months, the Government should be looking to sustain long term stability in the market by holding interest rates.”
