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Saturday, February 06, 2016

Interest rates on hold until 2018

The Bank of England  has signalled that interest rates may stay on hold until 2018.

All 9 members of the MPC decided to keep rates on hold at 0.5% this month.

Market expectations have pushed back a rise in interest rates as far as August 2018 which is great new for landlords like myself who are still basking in the cash-flow heaven resulting from a basket of mortgages tied to the absurdly low interest rate.

Why I'm still comfortable with a 5 year fixed rate mortgage

Despite expectations of an interest rate increase being pushed further into the future I’m still comfortable in remortgaging with a 5 year fixed rate product.  To me this de-risks my portfolio against a certain change in monetary policy.  Rightly or wrongly I feel comfortable paying a sub 4% rate of interest for the next 5 years even if I may pay slightly higher rates of interest in the short term if the current interest rate malaise continues.

Sometimes change can happen unexpectedly rapidly.  Lets not forget the ‘black swan” moment characterised by the credit crunch.  Always expect the unexpected! To me the benefits of certainty in the finance costs of part of my property portfolio outway the potential small amount of interest payments saved if my gamble doesn't come off.  Consequently I am prepared to be sitting here in 5 years time with egg on my face.   Only time will tell.

Finance my investment - mortgage search - all of market rates

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