Interest rates predicted to stay low for the next 2 years
Due to the struggling economy in the United States of America and the poor performance of their stock exchange, the United States has announced a series of measures to help keep their interest rates low for at least the next two years.
Since the US financial markets are so closely connected to the UK’s, it is therefore now widely thought that interest rates will remain low for the next two years in the UK also. The finance markets and banks certainly seem to believe this and there are some experts who believe that due to the slower than expected growth and recovery of the UK, that bank base rates could even be reduced a further 0.25 percent.
The current low interest rates, combined with low interest rate forecasts and lenders regaining their confidence to lend, have all led to the introduction of some record breaking long term mortgage deals.
As people start to feel that the government is getting to grips with the financial problems, there is the growing opinion that property prices are now as low as they are likely to get. This combined with lower interest rates and arrangement fees from lenders means that it is a great time to buy investment property. Consequently more and more property investors are buying houses, flats, shops and other commercial property to expand their property portfolios.
This has led to an increased demand for buy to let mortgages and also for bridging loans. Many investors use bridging loans to purchase property quickly from auction and also repossessions where being able to complete quickly often means securing a great deal on the purchase price.
Most buy to let mortgage lenders require a six month period from the purchase date before their will provide a mortgage on a property, however there are some great deals available on bridging loans that are required for 6 month periods. The 6 month wait is often a useful time to carry out any building work or other improvements to the property. This should also add value to the property and could therefore mean securing an even better deal for the buy to let mortgage facility which will of course be used to repay the bridging loan.
Similarly bridging loans are used to secure the quick purchase of shops and other commercial and retail property. This type of property is usually just sold on for a quick profit, renovated and improved before being sold on or kept as a long term investment, in which case it would be refinanced through a commercial mortgage and rented out.
Blocks of flats or apartments may also be purchased through the use of bridging loans, but would require a commercial mortgage to provide the long term finance option and the means of repaying the bridging loan.