Buy to Let Investors Are Not In Trouble
Maybe there is something in this, maybe not.
The funny thing is it's easy to make an argument one way or the other, especially if like me, all you do is read and write about investing in residential property.
On balance, though, I think that as long as interest rates don't go up too much, buy to let investors will be OK.
For example, here's an interesting statistic from the Council of Mortgage lenders. They say that the number of buy to let mortgages that are more than 3 month in arrears fell from 0.64% at end June 06 to 0.59% at end December.
Oh, and this was lower than the overall mortgage market where the number in arrears was a shade under 0.90%.
Of course, the low BTL arrears statistic could mean that a lot of buy to let property investors are just cross subsidising what in some areas are fairly miserly rental yields with other sources of income (in the hope of long term capital gains)
But these figures hardly show a market in crisis, just as long as those base rates don't go up too high.
And as we are only spending about 17% of our incomes on mortgages it's not too scary - yet.
The Alliance and Leicester has said base rates would need to hit 8.5% before we see the same pain as we did in 1990 when interest rates hit 15% (and we were spending 30% of our incomes meeting mortgage payments.)
I don't think that interest rates will hit those levels soon, so I think buy to let mortgages are safe for now.
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I’m David Lawrenson, a landlord and property investor myself for over
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Labels: buy to let advice, buy to let arrears, buy to let expert
This entry was posted by lettingfocus, on
Monday, February 19, 2007.
