Interest rates reflect how the economy is doing at any one time. For example, if inflation is high in the UK, the governments way to counteract a high inflation rate is to increase interest rates to decrease the amount of people taking out new mortgages. This this in mind, it shows you how much interest rates can fluctuate depending on the economy at the time and just as you could potentially see rates go from 2% to 5% (2020-2023), you could easily also see rates go from 5% to 2% (COVID, before 2020). So with all of this in mind, be sure to never let the media scare you away from a property investment due to “high interest rates”.
The fact is, interest rates are a short term metric. Property investing is a long term investment and you should never not invest in a property solely on the basis of interest rates being high, even if rates are eating away at any potential cash flow you may have.
Interest rates ebb and flow, meaning that they are sometimes low and sometimes high, and for this reason your focus should be on the other powerhouse metrics of property investing instead. Capital appreciation and rent increases are the two standout other metrics should be mainly considered when looking at your next investment as, once again, they are longer term metrics.
Yes, the interest rate at the time of taking out a mortgage can dictate how much cash flow you will receive after all expenses per month, but this is where the beauty of working with companies like ourselves comes into play as we will be able to guide you through what the best strategy to proceed with at any one time is. For example, if you have low cash flow, perhaps wait another 6-12 months and then remortgage at a lower interest rate, and in the meantime have the property increase in value. That is just one example of the clever ways in which we can help in the short term. Remember that our company prides itself of long term relationships as portfolio builders, so we will always advise accordingly.