Buy To Let property (BTL) investments in the UK remain strong- even as the sector braces for further interest rate rises.
The government faced calls to launch a fresh package of emergency financial support for households after The Bank of England issued warnings that Britain’s economy could plunge into recession before the end of the year.
Interest rates were recently increased from 0.75% to 1% in a bid to tackle spiralling inflation worsened by Russia’s invasion of Ukraine, the BOE forecasted inflation would rise above 10% this year, the highest level since 1982.
Andrew Bailey, the Bank’s governor, said there was a “narrow path” the central bank was forced to navigate between the added risks of inflation and recession facing the British economy. He said the inflation shock had been made worse by the impact on supply chains from Covid lockdowns in China and the rise in energy costs since Vladimir Putin’s invasion of Ukraine.
“I recognise the hardship this will cause for many people in the UK, particularly those on the lowest incomes, often with little or no savings, who are hit hardest by increases in the prices of basic necessities like food and energy,” added Bailey.
Are Buy To Let mortgages likely to be more expensive?
Undoubtedly, they will cost more, however, not that much. Taking a mortgage repayment of £150,000 as an example, a 0.25% increase (still enough to buy an ‘average’ priced property in the UK) would result in a rise in monthly repayments of just under £20.
The advantages of BTL for investors
One of the greatest advantages of being a Buy-to-Let investor is that it is possible to earn an income in two different ways. One way is through the rent paid by tenants of the property, and the other is through capital growth, depending on where the property is located.
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