We might be out of the recession but with the economy strengthening, change is expected when interest rates rise. Prepare now for a stable future using property management software systems to manage your portfolio cost-effectively.Pound (Eng)Land
How far will your £1 go? Inflation is on the up, so are property prices, as is the cost of living but will this affect your business?
You might have noticed that you’ve gone further in your car than you used to and returned from your holidays with more money in your pocket than expected as Europe crumbles (thanks Greece).
Leading up to the summer budget, the head of the Bank of England, Mark Carney spoke with concern that he saw the Buy-to-Let trend damaging for the British economy. Those worries have been settled by making the Buy-to-Let investment come across less lucrative. Today David Cameron, whilst on his 4 day business trip around Asia is tackling another property trend in post-recession Britain as he aims to clampdown on foreign investors hiding behind shell companies for money laundering purposes.
Interest rate increase sooner than expected?
When the country was in the dark days of the recession, for a quick recovery interest rates were reduced significantly to 0.5% and they have remained at that level ever since. For the country to move forward this does need to change but it is all about timing. For the last twelve months there have been rumours of a slow and steady increase but that plan is yet to materialise. Now it looks certain to happen in early 2016 however, inflation following the General Election has exceeded expectation so that could be brought forward to later this year.
Although the historical average interest rate is 4.5%, the target to get the country back on track is for it to return to a similar level prior to the financial crisis of 2%. For this to work without causing damage the increases will likely go up by 0.25% a time.
Learn from the mistakes of others
The budget showed us that we need to remain on the cautious side. We don’t want to find ourselves in a similar situation to Greece and China who ignored any warning signs, gambled with risk and lost.
Increases in interest rates can affect the property market on many levels as mortgage and loan repayments will increase.
Complete our contact form for more information on how property management software systems for Sage can help monitor and manage financials.