A couple of weeks ago, I mentioned in this blog about how
the Bank of England has been indicating recently that UK interest rates will be
going up in the not too distant future. Therefore, if you are one of the 31,407
homeowners in Plymouth, who own your own home with a mortgage, then you need to
consider your options and start to budget for an interest rate rise. However, if
you are a landlord, who owns one of the 18,694 rental properties in the city,
whilst your exposure to interest rate rises is lower, it is most certainly something
you should be aware of.
Since the spring of 2009, British interest rates have been at
a record low of 0.5%. It’s not a case of if, but when, they will rise. Some
people think it will be before Christmas, although I am of the opinion, it will
early in the New Year around Easter time, when they do rise. I also expect those
rises will be slow, steady and limited. It depends on what is happens to UK wage
rises, UK inflation and the general state of the British economy. Nevertheless,
as much most of us in Plymouth would love to pull the shutters and stick two
fingers up to the world, we have to recognise we are part of a global economy
and global economic worries still exist to prevent an abrupt and instantaneous rate
rise.
Those Plymouth landlords, who do have a mortgage, need to
realise that as interest rates rise, their monthly mortgage costs rise. It’s
easy to say you will look at your mortgage next month, then before you know it,
Christmas will be here! Don’t forget,
mortgage lenders have always removed the juicy low rate mortgage deals a few
months before interest rate rise. Speak to a qualified mortgage arranger, there
are lots of them in Plymouth and seriously consider fixing your mortgage rate
now. You didn’t buy your Plymouth buy to
let property for it to become a millstone around your neck. It’s all about
mitigating your costs and maximising your income to make your Plymouth buy to
let property the investment you want it to be.
However, on the other side of the coin, two in three
landlords who have bought property since 2007, have done so without a mortgage.
A rise in interest rates might be a good thing. Let me give you some background
first, then I’ll explain why. Plymouth landlords have see their return on
investment for their Plymouth buy to let property, over the last couple of
years, perform very well indeed with Plymouth property values rising by 12.19%
since the Spring of 2009. However, when rates do rise, whilst more expensive
mortgage rates will ease the demand for borrowing, on the other hand, it may temper
house price growth, making the property market more competitive... and
therefore, we should see the return of some bargain property buys in Plymouth!
Finally though, can I ask all Plymouth homeowners and Plymouth
landlords, who have a mortgage that isn’t fixed, they need to recognise that
rates will rise throughout 2016 to 2018 and will continue to move steadily
upwards towards more viable and feasible long term levels. I am not qualified to give that advice and
this is my personal opinion, so please speak to a qualified mortgage arranger
and, if appropriate, fix your mortgage before interest rates rise. Don’t say I
didn’t warn you!
In the meantime, if you are a landlord looking for a bargain
now, don’t despair ... there are plenty out there, if you know where to look!
One place is Rightmove, another Zoopla and another OnTheMarket. However,
sometimes, you can’t see the wood for the trees. At the time of writing,
Rightmove had 1,943 properties for sale in Plymouth, Zoopla 1,821 properties for
sale in the city and OnTheMarket 70 properties ... where do you start? A lot of
savvy Plymouth landlords like to visit the Plymouth Property Blog www.plymouthpropertyinsight.co.uk, where, irrespective of which agent is
selling it, I regularly post what I consider out of the hundreds of
properties on the market, to be the best buy to let deal in Plymouth.
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