Last week, we discussed how the longer-term plans of the Bank of England can be helpful in planning for property investment. It is also worth looking at some of the concerns that these low interest rates raise.
Some people are worried that the low-interest economic policies of the Bank and the Government’s direct housing programmes – schemes like Help to Buy – may lead to a housing bubble. The main concern is that house prices haven’t come down very far compared to previous recessions (sometimes referred to as “price correction”).
Property services companies like Cluttons and ratings agencies like Fitch see the potential for inflationary housing prices – particularly in London. Mortgage Strategy nicely summarises this:
Market conditions coupled with government intervention policies will have an inflationary effect on London house prices, according to research from Cluttons.
There has been a lot of good news from the economy recently, and clarity from the Bank and increasing availability of competative mortgage options help inform the buyers and give them more choices. But it is worth considering as many variables as possible when planning for your property investment, and that means balancing your potential risks directly with mortgage products. It also means watching the whole market for signs of problems, even when things are looking up.
If you would like to look deeper into the details of your particular investments, feel free to give us a call.