There's been a lot of talk in the press recently about how the Bank of England has been indicating recently that UK interest rates will be going up in the not too distant future. Therefore, if you are one of the 27,282 homeowners in Chelmsford, who own your own home with a mortgage, then you need to consider your options and start to budget for an interest rate rise. However, if you are a landlord, who owns one of the 8,349 rental properties in the City, whilst your exposure to interest rate rises is lower, it is most certainly something you should be aware of.
Since the spring of 2009, British interest rates have been at a record low of 0.5%. It's not a case of if, but when, they will rise. Some people think it will be before Christmas, although I am of the opinion, it will early in the New Year around Easter time, when they do rise. I also expect those rises will be slow, steady and limited. It depends on what is happens to UK wage rises, UK inflation and the general state of the British economy. Nevertheless, as much most of us in Chelmsford would love to pull the shutters and stick two fingers up to the world, we have to recognise we are part of a global economy and global economic worries still exist to prevent an abrupt and instantaneous rate rise.Those Chelmsford landlords who do have a mortgage, need to realise that as interest rates rise, their monthly mortgage costs rise. It's easy to say you will look at your mortgage next month, then, before you know it, Christmas will be here! Don't forget, mortgage lenders have always removed the juicy low rate mortgage deals a few months before interest rate rise. Speak to a qualified mortgage arranger, there are lots of them in Chelmsford and seriously consider fixing your mortgage rate now. You didn't buy your Chelmsford buy to let property for it to become a millstone around your neck. It's all about mitigating your costs and maximising your income to make your Chelmsford buy to let property the investment you want it to be.
However, on the other side of the coin, two in three landlords who have bought property since 2007, have done so without a mortgage. A rise in interest rates might be a good thing. Let me give you some background first, then I'll explain why. Chelmsford landlords have see their return on investment for their Chelmsford buy to let property, over the last 5 years, perform very well indeed with Chelmsford property values rising by 19.44%. However, when rates do rise, whilst more expensive mortgage rates will ease the demand for borrowing, on the other hand, it may temper house price growth, making the property market more competitive... and therefore, we should see the return of some bargain property buys in Chelmsford!
Finally though, can I ask all Chelmsford homeowners and Chelmsford landlords, who have a mortgage that isn't fixed, they need to recognise that rates will rise throughout 2016 to 2018 and will continue to move steadily upwards towards more viable and feasible long term levels. I am not qualified to give that advice and this is my personal opinion, so please speak to a qualified mortgage advisor and, if appropriate, fix your mortgage before interest rates rise. Don't say I didn't warn you!
In the meantime, if you are a landlord looking for a bargain now, don't despair ... there are plenty out there, if you know where to look! One place is Rightmove, another Zoopla and another OnTheMarket. However, sometimes, you can't see the wood for the trees. At the time of writing, Rightmove had 514 properties for sale in Chelmsford, Zoopla 198 properties for sale in the City and OnTheMarket 162 properties ... where do you start?