Interest rates rise again to 5.75%
The Bank of England raised its base rates yet again this month up to 5.75% this is the highest interest rates have been since 2001. This is bad news for anyone borrowing money for any reason as mortgages and loans of any type will be affected.
Many homeowners could soon be facing mortgage arrears and financial hardship as monthly outgoings will be increased by the recent rate rise. A borrower with a £100,000 variable rate repayment mortgage is paying £104 a month more than at the same time last year. Experts predict that the rates could hit 6% by the end of the year.
Most homeowners (57%) however are on fixed rate mortgages and therefore will not feel the pinch of the higher interest rates on their mortgage. until at least their fixed rate period ends and they have to remortgage. They may then find that it will be harder to get as good a deal on their home mortgage.
How does this affect investors with BTL mortgages? well as an investor myself I always get fixed rate products for as long as possible. this means that i know how much monthly payments will be for the next 3-5 years for each property. I am finding that new mortgages i take out have reduced fixed periods and increased rates. the current best rate i can get is 5.89% fixed for 2 years. not great i know.
one plus side is that as rates go up there will be more and more people wanting to sell their homes. many in financial hardship will be looking at sell and rent back solutions for their homes. as i am a part of one such company that offers these services it should be good for business.
over the last year the number of companies that offer such services have increased dramatically. there used to be about 3 or 4 companies that did these types of transactions. now a quick google search will reveal a few hundred such companies. its important for anyone looking for a sell and rent back solution to pick a reputable company that isn’t going to let them down. as a property investor myself I always aim to be fair, honest and ethical in all my dealings as i strongly believe in karma.
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