[Finance] Interest Rates - Review

[LamieRobertson]

I have a buy to let mortgage.
Set the rent for a 2 bed flat with garden and parking space at £1k a month in 2021 and haven't increased it.
I have good tenants in there who pay on time and look after the place so am keeping it as it is

…and was your mortgage fixed in 2021 or before?

 

[LamieRobertson]

Yep, its helping prices at the pump, saw £1.44 for diesel today.

Where May I ask…I know that prices vary geographically but locally cheapest is 151.9 for diesel

 

[slimes]

First direct online bank is 7% interest for 1 year only. Maximum £300 every month.

Loyds is ok but they charge £3 if you don't have £2k put in every month.

Natwest. Is I think 6.17% £150 every month and its interest is paid monthly.

 

[mikeyjh]

It might be a lower profit in one sense but, and using your example of a 2k rent, if you push up the rent and the tenant leaves you have a void period. If the house is empty for a month you lose 2k rent, plus you have to pay a month council tax plus various start up costs with the new tenants. This could easily come to 3k. So if you decided you wanted to increase the rent by 250 a month and the tenants left….you’ve now just cost yourself this same amount (over the next year).

I can only think it's 'amateur' landlords who would hike up rents for a good. You're entirely correct but I would add that if you put it up and then get a proper bad tenant, you may end up with 12 months of unpaid rent and thousands in legal fees.

Not hiking up rents is not only the right thing to do, it's the smart thing to do!

 

[Crawley Dingo]

The global money supply grew by 40% during lockdown and thats whats filtered through as inflation.

Heres the controversial bit.

Biden politicised the dollar which effectively stole money from Russia, this has caused the beginning of the collapse of the dollar as the global neutral currency(BRICs and all that). As the global store of Dollars is 7 times the dollars in the US economy this will trigger a growth in the money supply of about 700% over the next few years as those dollars return possibly causing hyper-inflation. To head this of the Fed has little choice but to tighten credit with high interest rates to contract the money supple by "controlled demolition" of US banks with the US taxpayer picking up the tab for JP Morgan.

What this means for us is a higher interest rate depending on the global interest rate, losses if we agree to hold dollars and fallout in lost trade if the US economy tanks. Things are going to really dodgy for a few years. On top of that we have 20% of the nations wealth invested in property which is nuts and exposes us to being punched about by global effects which will magnify as global rates keep changing.

 

[Herr Tubthumper]

I can only think it's 'amateur' landlords who would hike up rents for a good. You're entirely correct but I would add that if you put it up and then get a proper bad tenant, you may end up with 12 months of unpaid rent and thousands in legal fees.

Not hiking up rents is not only the right thing to do, it's the smart thing to do!

Agree.

 

[nicko31]

Inflation getting sticky, lenders starting to respond

Mortgage rates rise after inflation surprise

The increase in mortgage costs come as markets digest higher than expected inflation figures.

www.bbc.co.uk

 

[Uncle Spielberg]

A good time to have a look at rates 6-8 months before your present rate ends. Send me a PM or via my website. US/Gareth

 

[Carbonara]

Is it best to buy now or wait?what is happening with property prices?

 

[Uncle Spielberg]

Is it best to buy now or wait?what is happening with property prices?

That is impossible to say, house prices are holding up well at the moment here mainly due to a lack of properties

 

[Carbonara]

That is impossible to say, house prices are holding up well at the moment here mainly due to a lack of properties

So if prices are holding up well despite the ever rising interests rates then no reason to think they will fall as rates have almost peaked?

 

[SK1NT]

So if prices are holding up well despite the ever rising interests rates then no reason to think they will fall as rates have almost peaked?

People have been trying to buy at the cheapest time for years however if you can buy i would just buy. As US says the demand is high. The trend is for property to go up. Why wait... if you can afford it do it. It's a home at the end of the day, does it matter if if drops a bit or increases a bit, you won't be selling it. FWIW i think we have seen the end of the free money and low rates. I reckon 3% - 4% is going to be the norm.

 

[dsr-burnley]

So if prices are holding up well despite the ever rising interests rates then no reason to think they will fall as rates have almost peaked?

There's every reason to think they might fall, and every reason to think they might rise. Obviously low interest rates were a big factor in massive house price rises in recent years, but so also were the large scale immigration policies and lack of house building causing a shortage of supply. If immigration reverses or house building increases, that could put pressure on prices to fall.

It's anybody's guess. There are two powerful political lobbies at work here. One is house owners on high mortgages, who desperately do not want prices to fall. One is young people and first time buyers, who desperately do want house prices to fall. Both lobbies carry a lot of votes, which will certainly influence governments one way or another - in the current case, as in most cases for the past decades, the effect of that influence will make them panic and fail to do anything. So it's guesswork.

 

[Uncle Spielberg]

Pretty much all lenders have put their fixed rates up by 0.50% this week, a big hike

 

[southstandandy]

Just managed to get a 1 year bond for 5.25% via Raisin. As good as I've currently found.

 

[Carbonara]

There's every reason to think they might fall, and every reason to think they might rise. Obviously low interest rates were a big factor in massive house price rises in recent years, but so also were the large scale immigration policies and lack of house building causing a shortage of supply. If immigration reverses or house building increases, that could put pressure on prices to fall.

It's anybody's guess. There are two powerful political lobbies at work here. One is house owners on high mortgages, who desperately do not want prices to fall. One is young people and first time buyers, who desperately do want house prices to fall. Both lobbies carry a lot of votes, which will certainly influence governments one way or another - in the current case, as in most cases for the past decades, the effect of that influence will make them panic and fail to do anything. So it's guesswork.

If it's true that many landlords are offloading properties due to renting no longer being so attractive then I assume this could help to cause an oversupply and therefore prices to fall.

 

[dsr-burnley]

If it's true that many landlords are offloading properties due to renting no longer being so attractive then I assume this could help to cause an oversupply and therefore prices to fall.

It could indeed. On the other hand, forcing landlords to sell also forces tenants to find other accommodation, and that could cause house prices to rise (though the greater increase, which seems to be happening already, is likely to be an increase in rental costs).

It's a pure guessing game. The is no right answer - or at least, the right answer will only be known with hindsight.

 

[Live by the sea]

So if prices are holding up well despite the ever rising interests rates then no reason to think they will fall as rates have almost peaked?

In the most in demand areas of Sussex , namely various parts of Brighton & Hove it’s unlikely prices will reduce much if any cos the demand is so high . You are more likely to get a decent reduction out in the sticks in Sussex where viewings are far fewer in number .

 

[SK1NT]

Nicer areas are less affected by house price reductions, as there is always demand for those areas... (quality of the schools etc)

 

[nicko31]

How high are rates going to have to go to lance the boil?

Record pay rises fuel fresh inflation fears

Wages continue to rise strongly, raising the prospect of more interest rate rises by the Bank of England.

www.bbc.co.uk