A potential fluctuation in interest rates could have a significant impact on the financial conditions of landlords and homeowners.
Even the slightest of increases in interest rates could become unbearable for many homeowners who are already stretched to their maximum, it has been suggested by the Homeowners Advice Centre.
Interest rates form the basis of any economic recovery and it is likely that there would be at least a one per cent rise, according to Chris Jenkins co-owner of the advisory firm.
This predicted rise could set off a chain reaction of events that may usher in another period of difficulty in the property market.
A rise in interests would have a knock-on effect on buy-to-let landlords who will be forced to raise their rent charges to offset their rising costs, he indicated. In turn this would financially over-burden tenants who may even be forced to move home if the property is repossessed.
"Worse could be to follow too because as soon as landlords start to get repossessed, this could result in a shortage of rental property. A lower supply of property to rent can only mean increased demand, which would result in a further rise in overall rent levels," Mr Jenkins added.
A recent piece of research carried out by Spareroom.co.uk found that 41 per cent of landlords were struggling to cover the costs of their mortgage repayments and claimed that rent was hardly able to cover for their regular repayments.
The study also found that 43 per cent of landlords would be unable to repay their mortgages if the interest rates were raised by even two per cent.
Twenty two per cent of landlords confessed during the survey that the predicted one per cent rise in interest rates would mean that the rents paid by their tenants will no longer cover their repayment instalments while another ten per cent said that they would be able to cope with even a 0.5 per cent rise in interest rates.  |
0 comments
