In June the Bank of England raised Base Rate for the 5th time to 1.25%, the highest level since 2009, but what does this mean for the world of property investing?
Often, when the Bank Rate rises, mortgage lenders follow suit, increasing the cost of borrowing for investors. Investors with variable rate mortgages will see their monthly payments rising, while investors seeking new mortgages will be faced with higher rates than they might have previously.
As the costs of living also increase, tenants may not be able to afford rents, therefore slowing rental growth and reducing yields. While this all seems like a dark picture for property investors it is worth pointing out that in their historical context, rates still remain low. Property stills remains a good long term investment and hedge against inflation over time and a possible cooling of the housing market may allow investors the time to identify better investment opportunities.
If you would like to discuss how the base rate increases could be affecting you and your portfolio or property investment strategy please get in touch:
01225 800849