Speaking at an event for mortgage brokers in London, Stefano Silvestrin outlined a future in which rates rise gradually over the next two to three years to just over 2%, however, suggested this would have an immediate impact for many sectors.

In particular he suggested those looking at property in the future as an asset class might look elsewhere once rates begin to increase. Cash transactions in the UK housing market have held firm in recent years, up 3%. Silvestrin said this had been supported by a low-rate environment which had conversely made other asset classes, for example cash savings, less attractive.

He said: “But this may be counterbalanced when rates do start to move. Other assets may begin to look more attractive compared to property.”

He suggested that the buy-to-let sector in particular, and landlords especially, were benefiting from low rates. “Rates in the buy-to-let market have come down quite significantly. The spread between owner-occupier and buy-to-let rates used to be about 2%, now it has halved to 1%. Arrears levels for buy-to-let are also now lower than for owner-occupier mortgages. Low rates are having an impact in keeping these down.”

But Silvestrin warned that as rates started to increase the share of buy-to-let lending as a proportion of overall total lending was likely to reduce. “We expect modest growth for buy-to-let lending to be the most likely path,” he added.

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