-
Compare the market in seconds
-
Obtain an instant, customised, no
obligation
illustration
-
Choose from Fixed, Variable or Flexible
Rates
-
Residential or Commercial Property
Loans
-
Compare Buy to Let Lenders Terms and
Interest Rates
It is a modern day dilemma but that
the government faces in aiming to keep the housing market buoyant while
not jeopardising their inflation target. In a bid to keep inflation down
and reach a two per cent inflation target, interest rates are put up to
slow inflation. However, in doing this there cost of mortgages increases
and this can have a negative affect on the buy to let market and the
number of people deciding to take on by to let mortgages. However, that
housing markets can be greatly impacted when interest rates go up to the
extent that people we consider moving to larger houses, stepping up
their property ladder or investing in buy to let properties.
It is also a matter of a perception of
what interest rates will be doing in the future. During times of
stability went rates changes were few and far between, and market at a
higher degree of certainty as to choose the wake of the increase and the
speed in which it bought be implemented. As a result, mortgage borrowing
continued to rise at record levels from speculative property investment
purchases and first time buyers desperate to scramble on to another
housing ladder. As the recent interest rate rises have somewhat shocked
the markets and surprised commentators, that level of certainty has
diminished and alongside this confidence. Property prices have fallen in
geographic pockets, even though the overall price trend is still up. It
appears that there is a dilemma between managing their UK growth in an
orderly and stable fashion when that same GDP is so interlinked with the
property market and in particular speculative investments in their
rental sector.
During 2007, mortgage lenders have
tightened up their qualification rule the for new landlord lenders and
that number of mortgage approvals has decreased as underwriting policies
have become stricter and less free flowing.
Despite the risk of interest rate rises
on landlord profitability, the general supply of housing stock in the UK
as dramatically failed to keep up with increased demand. In particular
the influx of economic migrants coupled with the fate number of single
people seeking flats and apartments has continued to fuel price rises
despite dwindling levels of return on investment for property investor
landlords.
That level of government public spending
is still rising and the proportion of public sector and personal debt
levels from mortgages continues to rise at an alarming rate. Future
prospects for landlords seem uncertain. On the one hand that level of
demand for rental property does not appear to be reducing while the
available land continues to be tied up in local authority planning
bureaucracy. On that other hand the cost of money continues to rise set
amongst an economy which appears to have an endless and ever-increasing
overdraft facility at a national and national level. Surely basic
economics dictate that the return on investment in the medium and long
term will dictate the quantity and value of investment property
purchases in their short term. Time will tell.
Another challenge for existing landlords
in managing financial risk is also linked to new regulatory guidelines
such as the rental deposit scheme all what might be become known as the
tenancy deposits scheme (TDS). In addition new HMSO regulations are
forcing landlords to adapt existing properties to support shares tenants
in a safe and reasonable fashion. These unforeseen costs will marginal
impact overall profitability for landlords as well as providing
short-term inconvenience, albeit necessary. These are just
examples of additional unforeseen costs that will make landlords think
twice before applying for a new buy to let mortgage.
