Although the Bank of England’s Monetary Policy Committee (MPC) chose to maintain the base rate at 0.5 percent, borrowers are beginning to turn to fixed or capped rate mortgages as increases edge closer, says Simon Gammon, Head of Knight Frank Finance.
He said: The choice to keep your base rate on hold at 0.5 percent for the 22nd month running was very much not surprisingly, but the pressure for an increase is beginning to mount.
“Commentators on which the financial institution of England is going to do next are very much split in opinion, however with inflation refusing to fall, the majority who were predicting no rate rises in 2011 now expect an increase at some point in the past year.
“The fact that the economic recovery appears to have slowed can make the MPC wary of raising rates too soon, but increasing inflation brings its serious issues that cannot be ignored.
“Uncertainty by what will happen to interest rates is driving people to consider their options, especially with regards for their mortgages. With fixed rates now beginning to edge up, now's a great time to review your borrowing.”
• Cases involving rent arrears rose by 12 percent and today take into account 80 % of new instructions given to eviction specialist Landlord Action.
Cases directly associated with Local Housing Allowance (LHA) tenants increased by 16 percent.
In 2009, 60 percent of new instructions came from lettings agents whereas, this year, the dpi fell to 45 percent, suggesting that landlords are increasingly managing their own properties.
But Landlord Action founder Paul Shamplina warns that although landlords may feel that they are saving cash, this can have its drawbacks.
He said: Self-managing landlords often try to cut corners in the hope of saving cash by not referencing potential tenants properly or otherwise making certain they've adequate landlord insurance. This can cost them more income in the long-term.
“However, if your landlord does run into trouble, our data shows that there's been a substantial reduction in time between landlords making an initial enquiry to actually giving formal instructions, demonstrating that they are no longer prepared to sit back and are taking quicker action to recoup outstanding monies.
“We have evidence of landlords needing to use their credit card to make mortgage payments due to the failure of their tenant to pay for the rent, or needing to arrange for a third party to take rent payments using their tenant via a credit card, a practice which has been recently bought towards the forefront through the housing charity Shelter, which reported tens of thousands of households purchased a credit card to pay for their mortgage or rent.”
Because the government announced the proposed caps to Local Housing Allowances, Landlord Action has received an increasing number of calls from landlords seeking guidance on this sector where requires advice have raised by 35 percent - many of the prevalent in London and the South East.
Shamplina continued: “In the short term, landlords facing repossession action because of mortgage arrears caused by non-payment of rent by tenants is likely to continue. We expect interest rates to remain low but advise landlords to become cautious, especially if they've high gearing on the property portfolios.
“Rent levels had already begun to increase in the latter part of 2010 and we expect this trend continue into 2011, which will give landlords some cheer. However, although this is likely to attract more investors into the market, historically low lending levels will place a sizable barrier to entry for a lot of, thus, we expect house prices to become stagnant.”
Looking to sell house quick? We can help you sell house quick if you are thinking about sell my house quick then we can help you achieve a quick sale via sell my house quick.