Interest rates at 7%

IFA

Well these interest rate rises give me even more incentive to pay my mortgage off early so I can start a proper savings plan and take advantage of the higher interest rates

Eyesparky

BTL is still a significantly smaller section of the market than FTB. By reading this thread you would think that BTL were grabbing 90% of the housing stock coming to the market. It is more like 6-7%.

In addition any BTL buyer with a modicum of financial acumen would not enter into a property if the gearing was not adequately covered by the return. I know a number of BTL are looking for capital growth (can be dangerous) but any professional investor will make sure the numbers stack with room to maneuver.

The one area that is tough for FTB is the current lack of run down properties available to allow them to get a capital position through adding value through hard work. Developers and developing BTL landlords have massively impacted this route to FTB. Not having a go at FTBs as I know it is really difficult, but I do get a tad tired of all the BTL bashing. Lets get off the blame culture and look for viable solutions.

ukbondraider

lynzpower wrote: »

what did you do? was yours fixed at 3.5?

My first house was fixed at 4.2% for 5 yrs (fully paid off in the 5 yrs).

My third house is going through at the moment and is fixed at 5.39% for 10 yrs and will be fully paid within that 10 yrs

superspudking

here is the was i see the whole BTL thing

If you have a village of 100 homes each worth £100,000. So 100 people wanting to move into those 100 homes would have to pay £100,000 each, but 25 of those people buy 2 homes each (1 for themselves the other to rent). This still leaves 75 people looking to own there own home but only 50 for sale. The demand is now higher which is reflected in the price of the remainding 50 houses.

Then interest rates rises. house prices fall. BTLers either can not afford the 2nd home or think thier money is better off in a HIGH INTREST savings account. So more houses availible to buy but because of high intrest rate less peolpe able to afford a house. demand is now low!

Thats how i see things anyway. I know its alot more comlicated than that.

As i do not have a morgage i would like to know
What would a 7.5% intrest rate do to you?
What does each potential 0.5% rise actually mean to the average home owner?

thanks

Gorgeous_George

Guy_Montag wrote: »

Tax relief on their interest payments.

BTL LLs do not get tax relief on their interest payments.



GG

franklee

[RANT] Why are interest rate rises so often reported and talked of as a bad thing? If you can't be happy about interest rate rises on a site called money SAVING expert then were can you be? Why are savers always supposed to give way to over borrowers. Low rates have been a bad thing IMO, they've caused inflation and rampant borrowing and the sooner they are raised to a more sensible level (6-7%) the better. And by historical standards that isn't even high!

overborrowedtillthepipssqueak.com anyone? [/RANT]

Gorgeous_George

superspudking wrote: »

here is the was i see the whole BTL thing

If you have a village of 100 homes each worth £100,000. So 100 people wanting to move into those 100 homes would have to pay £100,000 each, but 25 of those people buy 2 homes each (1 for themselves the other to rent). This still leaves 75 people looking to own there own home but only 50 for sale. The demand is now higher which is reflected in the price of the remainding 50 houses.

Then interest rates rises. house prices fall. BTLers either can not afford the 2nd home or think thier money is better off in a HIGH INTREST savings account. So more houses availible to buy but because of high intrest rate less peolpe able to afford a house. demand is now low!

Thats how i see things anyway. I know its alot more comlicated than that.

As i do not have a morgage i would like to know
What would a 7.5% intrest rate do to you?
What does each potential 0.5% rise actually mean to the average home owner?

thanks

What if

If you have a village of 100 homes each worth £500 per month rental. So, 100 people wanting to move into those 100 homes would have to pay £500 per month each but, 25 of those people buy 2 homes each (1 for themselves the other to rent). This still leaves 75 people looking to rent there own home but only 50 for rent (well ok it's 75). The demand is now no different which is reflected in the price of the remaining 50 houses.

Absolute horlicks.



GG

Gorgeous_George

franklee wrote: »

[RANT] Why are interest rate rises so often reported and talked of as a bad thing? If you can't be happy about interest rate rises on a site called money SAVING expert then were can you be? Why are savers always supposed to give way to over borrowers. Low rates have been a bad thing IMO, they've caused inflation and rampant borrowing and the sooner they are raised to a more sensible level (6-7%) the better. And by historical standards that isn't even high!

overborrowedtillthepipssqueak.com anyone? [/RANT]

IRs are relative (not like Uncles or Aunties). 7% is great if inflation is 6% but it's pants (not like trousers) if inflation is 8%.

Equally, 7% with 6% inflation is worse than 4% with 2% inflation.

Just think, all those poor, repossessed people adding to the demand for rental properties.



GG

Generali

Gorgeous_George wrote: »

Just think, all those poor, repossessed people adding to the demand for rental properties.

Lots of repos are likely to mean an economic downturn (recession/depression). That means more poor reposessed people looking for housing benefit to pay their rent.

I'm sure your business model is fine if you don't get any rent for three months either because the HB guys are useless or because you won't take HB tenants and that's pretty much all there is. I'm not sure everyone else's is.

Gorgeous_George

Generali wrote: »

Lots of repos are likely to mean an economic downturn (recession/depression). That means more poor reposessed people looking for housing benefit to pay their rent.

I'm sure your business model is fine if you don't get any rent for three months either because the HB guys are useless or because you won't take HB tenants and that's pretty much all there is. I'm not sure everyone else's is.

My business model is fine, thank you for asking. The tenanats are responsible for the rent.



GG