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 6,224 homeowners in Grantham, 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 3,127 rental properties in the town, 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 Grantham 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 Grantham 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 Grantham and seriously consider fixing your mortgage rate
now. You didn’t buy your Grantham 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 Grantham 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. Grantham landlords have see their return on
investment for their Grantham buy to let property, over the last couple of
years, perform very well indeed with Grantham property values rising by 10.55%
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 Grantham!
Finally though, can I ask all Grantham homeowners and Grantham
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 332 properties for sale in Grantham, Zoopla 193 properties for
sale in the town and OnTheMarket 59 properties ... where do you start?
