The Council of Mortgage Lenders have produced their latest insight into the mortgage market and the UK economy which makes for good reading. But what does this information mean for a Buy To Let investor in Hillingdon who is thinking about buying a house or flat in West Drayton or Uxbridge?
Stable UK Economy
The report shows growth is positive, with risk factors such as a slowdown in China present but jobs continue to increase in the UK albeit at a slowing rate.
Jobs drive housing demand in a given area and that is more important than the national figure, but positive growth remains good for landlords everywhere.
Interest Rates
Likely to go ahead with small increases later in the next year. A change in the American Federal Reserve would be a key indicator of rates rising in the UK.
Personally I think the threat of interest rate rises is perhaps more effective than actual interest rate rises in dampening excess borrowing. If the jobs growth flattens and inflation is under control this will delay interest rate increases from the Bank of England.
Longer term the Governor of the Bank Of England has signalled base rates will rise to around 2.5%.
Mortgage Demand
Demand increasing thank you very much! I was interested to see the demand for Buy To Let (BTL) mortgages remains strong.
No notes from the CML that the Chancellors change to tax on mortgage interest has dampened BTL enthusiasm. Maybe because many of us own or want to buy one or two properties and think that these will form a key part of our pensions later on when we will be less likely to be higher rate tax payers.
Or perhaps the very increases in property prices fuel BTL demand. Better to buy and be invested than have the money devalue in a bank account.
How many Houses are being sold?
In the UK they are up on last year with an increase in houses sold of 5.6% for the first five months of the year. But for Hillingdon the figure is different, a fall of 15%.
My feeling is this is due to a lack of available houses to sell in the area which is driving Hillingdon having some of the fastest rising property prices in London and the country. Locally, I don’t see that imbalance changing in the short term so expect continued house price increases into 2016.
The full report from the CML can be found here.
Written by Jeremy Wasden 18.09.2015
