General (main property discussion here) - Deep breath in and tighten belts?

No doubt you will be aware that the interest rate has made a surprise jump up. Is this putting people of ? That is, are you slowing down the portfolio build due to the rate hike? Thoughts please.

Regards, Malik

i predicted a slow down 18-24 months ago!! didn't happen so i am not sure my opinion is worth much.

i am concerned though to be honest. many of the variable mortgages taken out 2 years ago must be coming up for renewal and the higher rate of interest must begin to pinch sooner or later.

debt is very high nationally (in the UK) as well but while the economy and employment is robust (due the strong corporate environment) then this is less of a concern.

looking at the US where rates have hiked (albeit more dramatically) and the economy is more fragile, the housing market is looking a little more precarious.

anyway who knows. just a few thoughts.

tom

Variable rates do leave investors vulnerable to interest rate rises which is why I always use fixed rates.

What I really cannot understand are all those people who take out short fixed rate mortgages of only 2/3 years. Such a short term gives little protection against rate rises plus you have the costs of redeeming the first mortgage and setting up another mortgage after only 2 years.

When I started investing I used 5 year fixed rate mortgages and a couple of years ago when most had come to the end of their term I moved most to 10 year fixed rates.

So in that respect I'm ok. But a problem arises if interest rates rise and lots of investors on variable rates or short term fixes cannot service their loans and are forced to sell their properties and weaken the housing market.

Chris Bell

http://www.buytolettips.com