Bank rate rise good news for b2l landlords

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Bank rate rise is good news for B2L landlords

The Bank of England’s expected rate rise of a quarter per cent to 5.75% was greeted as good news for the buy to let sector by UCB Home Loans.

Keith Astill, managing director of Nationwide’s specialist lender UCB Home Loans, said: “The combination of high house prices and more expensive loans is pushing more people into the rental market, where, as tenants, their overall outgoings are generally lower than those of homeowners.”

The lender also reported that sales of buy to let properties are still rising quickly, despite increases in prices and interest rates. It said this was because property investors typically take a long-term view of 15 years or so when making a purchase, so short-term variations in interest rates are of less concern to them than might be the case in the mainstream mortgage market.

Stephen Kenny, chief executive of ThePropertyInvestmentMarket.com, said that so far buy to let investors had ridden the storm. But he warned: “As the cost of owning a property rises, investors should pay attention to regional price differences and do their research to help maximize profit in the long-term.”
While mortgage lender for owner-occupier businesses, InterBay Commercial said despite the fifth interest rate in the last year the commercial sector continued to be buoyant.

Operations director, Colin Bell, said he thought a further rise to 6% was on the cards because of the bank’s desire to “cool credit applications”.

However, employer’s body, the Confederation of British Industry warned the bank’s monetary policy committee that another rise would hurt businesses.

CBI chief economic adviser Ian McCafferty said: “A slower economy later this year would make it unlikely that the recent ability of companies to push up prices will endure.

“Businesses are concerned that any move to 6% would be overkill, so now is the time for the Bank to leave a long pause to allow the economy to adapt to these new levels.”

Barry Naisbitt, chief economist at Abbey said future rates would be dependent on key economic data such as June’s inflation figure which is widely predicted to be lower than May’s 2.5%.