The Rise of Interest Rates in the UK

Inflation was much higher in the 70s and 80s but at the time earnings were rising quite rapidly along with inflation so the principal owed on mortgages shrank as a percentage of borrower incomes. The Monetary Policy Committee made little comment on market expectations that interest rates would rise by an additional 1% by the end of the year. A lot of private landlords began exiting the rental business in the UK after George Osborne's Financial Act began phasing out mortgage interest relief and other tax deductible costs for landlords. Buy to let landlords typically borrow at higher interest rates and are usually more sensitive to interest rate increases since they take out interest only mortgages.