A couple of weeks ago, I mentioned in this blog 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 4,601 homeowners in Epsom, 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 2,253 rental properties in the town, 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 be early in the New Year around Easter time, when they do rise. I also expect those rises will
be slow, steady and limited. It also depends on what happens to UK wage rises, UK inflation and the
general state of the British economy. Nevertheless, as most of us in Epsom 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 Epsom 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 and 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 Epsom and seriously consider fixing your mortgage rate
now. You didn’t buy your Epsom 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 Epsom 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. Epsom landlords have see their return on
investment for their Epsom buy to let property, over the last couple of years, perform very well
indeed with Epsom property values rising by 43.36% since the Spring of 2009. 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 Epsom!
Finally though, can I ask all Epsom homeowners and Epsom 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. However, I am not
qualified to give that advice and this is just my personal opinion, so please speak to a qualified
mortgage arranger and, if appropriate, fix your mortgage before interest rates rise. Don’t say I didn’t
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 373 properties for sale in Epsom, Zoopla 269 properties for sale in the town and
OnTheMarket 136 properties ... where do you start? A lot of savvy Epsom landlords like to visit the
Epsom Property Blog, where, irrespective of which agent is selling
it, I regularly post what I consider out of the hundreds of properties on the market, to be the best
buy to let deal in Epsom. Alternatively you can email me on firstname.lastname@example.org.