Therefore, if you are one of the many homeowners in Newport, 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 a rental property 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, 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.
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. Newport landlords have seen their return on investment for their Newport buy-to-let property, over the last 5 years, perform very well indeed, with Newport property values rising up to 19.44% in certain areas. 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 Newport!