As speculation continues as to whether the base rate will increase next month it could be a worrying time for many people, particularly those attempting to get their first foot on the property ladder. But what about the UK's vast army of landlords?
James continues: “After the Monetary Policy Committee kept the Base Rate at 0.25% in February, the consensus was that their next decision, now just two weeks away, would signal the start of regular rate increases. And whilst Mark Carney’s comments last week seemed to suggest that a rise may not be quite that soon, either way I don’t think most landlords have all that much to worry about – either now or at such point as rates do increase.
There are a number of factors to consider here. Any such rate increase won’t have come out of the blue and borrowers have had plenty of time to consider their response and how they might mitigate any negative impact it could have.
But that’s assuming an increase would have a detrimental impact. Upad’s own data suggests that over 50% of landlords with loan liabilities are on fixed term mortgages. Simply this means that there’ll be no immediate effect either way for them. Furthermore, a significant percentage of these will be on deals of two to three years which, when they do come to refinance, are likely to have already been superseded by more competitive products. By all accounts that means that many landlords stand to actually make lower repayments in the future.
Meanwhile, for those landlords looking to go onto a new product shortly, this potential interest rate rise has been long anticipated and lenders will have already incorporated it into their current rates given that the 12-month Libor SWAP rates started increasing at the start of this year.
However, this isn’t just a message about mortgage interest rates. Due to an on-going lack of affordable housing for purchase, there’s a burgeoning tenant population with more tenants tending to remain in rental properties for longer than they have done in the past. This means, I believe, that it’s actually an awesome time to be a landlord and those who are serious about it, won’t be put off by an interest rate increase.”
