Future Interest Rate RisesMake Text Bigger
We hear many commentators referencing “when” interest rates may rise. Just yesterday I heard late 2014 and previously first quarter 2015. Ben Bernanke has stated that US rates will stay low for some time, whatever that really means, but I’m assuming this to be for 2-3 years? Obviously the new guidance by the BOE and its link to the unemployment rate is a factor that has had many people trying to double guess when rates will rise in the UK. Of course those that have been on base rate trackers have enjoyed the last few years and yes this all may come to an end in the next year or so. I personally think that Mark Carney will not want to rush things. He seems conscious of the debt levels of many UK households and will only increase rates when he feels he has to cool things down. When they do rise I think they will be gradual, maybe 0.5% per year rising to 5% over a few years. Unless of course other economic factors crop up and he has to take evasive action quickly.
I’m just curious to know what other landlords think and if people like me spend too much time worrying about how we would cope funding our multi-million pound mortgage debt when margins decrease and rates go beyond 5 or 6%. Yes I do put money aside for rainy days, but if rates creep up to 7 or 8% that starts to hurt. Maybe if rates do go up significantly, rents will have to rise across the board to accommodate this as many landlords will be in the same boat?
Any thoughts ………..
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