Recent press articles debating whether or not the base rate will remain low, have prompted speculation into where mortgage rates will go in the next six to twelve months. With this in mind, Rick Flay a leading lettings agent in Sheffield has warned that such increases could push landlords over the edge.
As some lenders increased their fees in August, escalating the payments on a mortgage of £250,000 by £70 a month, Rick, warned that an interest rate increase in 2011 could see the UK hit by many more repossessions.
Rick, Director at Belvoir Sheffield, who offer a wide range of property to rent in Sheffield, said: “Many landlords are finding that they are already stretched to capacity. If mortgage rates do increase, it will of course result in more repossessions. It is also highly likely that a rate increase will result in many landlords suffering negative equity as prices would potentially drop due to even further reduced demand.”
The Bank of England, which has frozen rates for the past 18 months, is rumoured to begin increasing its key rate from the middle of next year, affecting even those with tracker mortgages.
In line with these predictions, a number of economists have also speculated that the Bank of England may enforce two 0.25pc rises in 2011.
Rick continued: “If the predictions of an interest rate rise in 2011 are correct, the impact on the rentals market will be immense. Not only will landlords be faced with higher mortgage bills, but tenants will suffer too as landlords try to push up rents to cover their increased costs. Many low income families who cannot afford to buy properties in the current market are opting for rental properties, because it is the cheaper option. This could however be extremely short lived if the Bank of England does decide to increase its key rate.”
Belvoir Lettings Agency Sheffield is the One Stop Specialists for Lettings including Property Management, Tenant Find, Investment and Wealth Management Advice, Fit-outs and Renovations, Furniture Packs and Investment Property Insurances.
