How much time to hold the interest rate of the Bank of England?

Homeowners in the UK who receive income from renting their property, suggest more carefully assess risks when making decisions about investing in new property. According to experts, the income from such investments may be significantly reduced because of the risk of a rise in interest rates by the Bank of England earlier than expected. As reduce unemployment and at the same time wage growth is historically low interest rates, which are now in the UK, you can start to creep up.

Now the rental market of residential property in the UK is under the influence of very good demand and rates on rent is constantly growing. Against the background of historically low interest rates on mortgage loans that are directly tied to the rates of the Bank of England, homeowners are getting good rental income. However , if mortgage rates start to rise, rental yields may be reduced due to the fact that tenants simply cannot pay more. Already today, the possibility of tenants has reached its maximum capacity, which is determined primarily by the cost of living of the average Briton.

Therefore, homeowners in the UK should expect their investment portfolios for the future given the fact that the interest rate of the Bank of England, followed by the interest on the mortgage loans will inevitably increase after the next 18 months. In the short term, about 1-1. 5 years should not expect radical steps from the Bank of England, because in the UK at the beginning of the 2015 General elections would be held before the election, usually the government is reluctant to take unpopular measures. But after the election, according to forecasts, in three years the rate of the Bank of England may rise to 3% and mortgage rates up to 7%.

Recommendation of the investor – now is the time to look for the possibility of lending for existing properties and for new mortgage contracts to try to get the ratio of loan to total cost of your purchase as low as possible.

If the homeowners – investors focused on the long term, they need to track trends and developments that have emerged in the market and to act in pace with the times.

® Helen Entree. 17.04.2014 g.

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