Landlords will have to wait a few more months for any real mortgage rate relief, despite today’s fall in inflation to 2%.

It’s the first time inflation has fallen back to the Bank of England target in almost three years, but is unlikely to affect tomorrow’s decision on the base interest rate.

Mortgage advisors believe the Bank will hold it at 5.25% and wait until August or September to make the first cut in three years. Interest rate reductions should follow – and relief for those landlords coping with expensive mortgages.

Inflation was always expected to drop below 2% but wasn’t a reason in itself to cut interest rates, Lee Grandin (pictured, left) at Landlord Mortgages tells LandlordZONE.

“My understanding is that service sector pay increases are above where the BOE want them and that will encourage the BOE to be cautionary,” says Grandin. “Markets are already pricing in a cut; I don’t envisage a sudden cut in mortgage rates.”

Gavin Richardson (pictured, below), managing director at MFB, agrees that while some lenders are already pricing down, he doesn’t expect to see significant decreases for a while yet.

“SWAP Rates are softening, which is a good indicator that mortgage rates will come down over the long term,” he adds.

Although the next BOE meeting is in August, there’s more likely to be a much-anticipated reduction in September, Richardson tells LandlordZONE. However, this will depend on economic reactions to the election results.

He advises BTL landlords not to wait for mortgage interest rates to come down – instead, while property prices are back on the increase, now is the time to snap up bargains and benefit from long-term capital gains.

“We won’t see the incredibly low rates we enjoyed before the 2022 mini budget for a long time yet - if ever. Don’t risk falling onto your lender’s (expensive) standard reversion rate, hoping rates will significantly decrease soon,” Richardson adds.

The next three decisions by the BoE's Monetary Policy Committee are due out tomorrow, 20th June and then 1st August and 19th September.