[Finance] Base rate increase.

[Herr Tubthumper]

Obviously there are local variations but in Burgess Hill there’s still significant excess demand for rental properties (particularly at the entry level end) - as long as that’s the case rents aren’t going to fall. Property sales have slowed right down though - houses on our road very rarely come up for sale and usually sell immediately, we’ve had two on the market for over 6 months.

It’s the same in Brighton and Hove.

 

[Shropshire Seagull]

Note that I wasn't saying falling from where they are now. More a case of if rents go up a lot (to combat the cost of borrowing increases) and we get enough of a recession that people can't afford the rents, meaning demand at the high prices falls.

I wouldn't be surprised if we get very difficult economic issues in the next decade.

And my angle was that if Buy-2-let mortgage interest rates go up, many / most / all landlords will pass this on to their tenants rents to cover their "losses".
But when the B2L rates fall, as they surely will in time, I'll wager landlords keep rents the same [as high demand underpins premium price] so landlord margins [aka profit] get bigger [but so too will their tax exposure] ...

Mortgage arrears repossessions are one thing but landlords evicting tenants will also become significant [I fear] - big trade in Bailiff-ery on the horizon?

 

[Berty23]

And my angle was that if Buy-2-let mortgage interest rates go up, many / most / all landlords will pass this on to their tenants rents to cover their "losses".
But when the B2L rates fall, as they surely will in time, I'll wager landlords keep rents the same [as high demand underpins premium price] so landlord margins [aka profit] get bigger [but so too will their tax exposure] ...

Mortgage arrears repossessions are one thing but landlords evicting tenants will also become significant [I fear] - big trade in Bailiff-ery on the horizon?

My old man uses a letting agent for his property. He has finished the mortgage and he is exploring changing the agent. They keep contacting him to tell him he could put the price up loads because of market conditions. He tells them he does not want to because the current tenant has been in there for over 5 years and keeps it nice and tidy and he needs the money for his young family more than dad. Obviously the letting agent earns more from higher rent so they keep nagging him to whack it up “because he can because the person will stay there and still pay”

Not just landlords trying to squeeze people, the letting agent leeches are too.

 

[Triggaaar]

And my angle was that if Buy-2-let mortgage interest rates go up, many / most / all landlords will pass this on to their tenants rents to cover their "losses".
But when the B2L rates fall, as they surely will in time, I'll wager landlords keep rents the same [as high demand underpins premium price] so landlord margins [aka profit] get bigger [but so too will their tax exposure] ...

I replied to this already. It's not as simple as that. If a landlord's mortgage on a 2 bed flat goes up £900 a month, they cannot simply pass it on to their tenants rent, because the tenants won't be able to afford it.

The idea that landlords can put up rents as much as they like without losing their tenants would suggest that up until now they've been letting places for much less than the market will bear, and that's not the case.

Mortgage arrears repossessions are one thing but landlords evicting tenants will also become significant [I fear] - big trade in Bailiff-ery on the horizon?

If landlords are evicting tenants, who's going to fill the homes they were in? Lots of tenants being evicted, but no new supply of tenants who are now willing to pay a lot more than they weren't able to pay up until now.

But that's not to say rents will fall, more that they won't go up as much as some mortgages.

 

[erkan]

Is anyone on here willing to admit to being an Estate Agent?

Property sales in Eastbourne seem to be at an all time slow rate especially at the upper end of the market. With so few sales, and active buyers in the market, it is hard to determine whether real property values are actually falling or is it just that to sell quickly at the moment it is necessary to discount price and stand out from the pack...? As March turns to April one would normally expect the rate of market activity to pick up noticeably compared to winter months. Any indication whether that will, or will not, be the case in Sussex this year?

 

[Weststander]

Good news for anyone mortgaging or remortgaging soon, deals likely to be less than 4%. Just a few months ago I think 7% wasn’t uncommon. @Uncle Spielberg would have the lowdown.

 

[Westdene Seagull]

Maybe I'm being stupid here but how does that last sentence equate to the current BoE base rate being 5.25 ? I wasn't aware banks could lend below the base rate on mortgages ?

 

[Weststander]

Maybe I'm being stupid here but how does that last sentence equate to the current BoE base rate being 5.25 ? I wasn't aware banks could lend below the base rate on mortgages ?

It’s a free market on deals not tied to bank base rates.

The interest cost of new products to banks is determined by the (rapidly falling) swaps market rates.

 

[zefarelly]

My old man uses a letting agent for his property. He has finished the mortgage and he is exploring changing the agent. They keep contacting him to tell him he could put the price up loads because of market conditions. He tells them he does not want to because the current tenant has been in there for over 5 years and keeps it nice and tidy and he needs the money for his young family more than dad. Obviously the letting agent earns more from higher rent so they keep nagging him to whack it up “because he can because the person will stay there and still pay”

Not just landlords trying to squeeze people, the letting agent leeches are too.

He should get shot of the letting agents all together! Parasites.

 

[zefarelly]

Maybe I'm being stupid here but how does that last sentence equate to the current BoE base rate being 5.25 ? I wasn't aware banks could lend below the base rate on mortgages ?

Banks can, and do, do what they like . . . If they want to lend to you for free they can . . . . They may go bust, but thats their decision.

if they're offering lower rates long term, they're clearly of a mindset rates will drop.

I'm fixed for 22 more months, and am stashing as much as I can in the mean time . . .hoping things have improved a bit in 2 years . . . . Although TBH this country is right royally f***ed for at least the rest of the decade IMO.

 

[Machiavelli]

Maybe I'm being stupid here but how does that last sentence equate to the current BoE base rate being 5.25 ? I wasn't aware banks could lend below the base rate on mortgages ?

Mortgage deals are offered not on the current BoE base rate, but what the lenders expect it to be over the lifetime of the deal itself, plus some profit for them too.

 

[Uncle Spielberg]

There seems to be more stability now. Rates are down to around 4.5 - 5% and there is a rate competition between lenders as a lot of them are well below previous lending levels. I will be offering help and advice and will post next month