Not just an historic low that's equal to the last historic low, but a whole new historic low!
That's what the Bank of England achieved when they dropped the base rate to just 0.1% last week.
Following the historic reduction to 0.25% on the eleventh of March, the Bank of England has decided that it is fitting to reduce the base rate for England yet again and this time it's even lower. For the first time, it has been reduced to just 0.1%. COVID-19 has caused some huge changes in the lives of property owners, and this may prove to be a long lasting one as raising rates is likely to be tricky for some while now.
What will this mean for your buy-to-let portfolio?
For most investors who use fixed rate mortgages, the effect of this change probably won't be felt for a while. (Make sure you record fixed rate mortgage expiry dates in PaTMa so you don't miss them.)
However, if you've got properties on a standard variable rate or tracker rate, you'll likely see the result of this base rate reduction quite rapidly.
For trackers that mirror the reduction exactly you'll see your mortgage payments go down by £12.50 per month for every £100,000 of mortgage borrowing (assuming you have an interest only mortgage). This reduction is from the base rate of 0.25% set on the eleventh. If you didn't know about this make sure you check my last post.
You can use the free re-mortgage buy-to-let profit calculator to see what the effect will be in your particular scenario - enter your own mortgage borrowing and your new interest rate.
Still looking for your next buy-to-let deal?
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