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As the cost-of-living crisis continues to rise throughout the UK, the stubborn inflation figures are telling as leading financial experts anticipate further increases to interest rates. The buy-to-let market is feeling the brunt of the current economic climate.
Economic forecasts released on Monday, 12th June, have predicted a continuation of interest rates, despite a more optimistic bigger picture. Although many may be hopeful for more economic stability on the horizon, there may be a considerably longer period for lethargic growth in the financial market.
According to KPMG, via The Guardian, stickier inflation is a significant factor towards the current higher interest rates. Predicting higher inflation for a longer period than previously hoped, KPMG are anticipating interest rates to continue rising throughout 2023. When compared to historical standards, the current inflation is prolonged, meaning that lenders will be forced to increase rates over a longer period to battle against the heightened climate.
Current Economic Situation Affecting Buy-to-Let Market
As per our previous article, which you can view here, The Bank of England revealed that lenders approved fewer mortgages in April than in March, according to recent insight. Additionally, new mortgage lending figures saw a decline because of the stagnant housing market.
With the market in an exaggerated state, we’re likely to see interest rates causing financial restrictions for homeowners across the country. This is bound to cause headaches for brokers as they look to provide home insurance to their customers. At Source, we pride ourselves on our new systems that counteract the increasing rates. With competitive prices for all customers, your clients can save money on their home insurance, leaving them more breathing room regarding interest rates and mortgages.
Mortgage Rates Continue to Climb with Primary Names
As of last week, Nationwide Building Society were forced to raise their mortgage rates due to the current economic climate, consequentially adding extra pressure to the property market. The mortgage rate rise was at a reported 0.25% increase amid an emphasised 8.7% rate of inflation across the country.
At the time of writing, The Guardian are also reporting that NatWest are set to increase their interest rates to combat the inflation throughout the property market. The popular baking group has said,
“Effective 13th June we’re making changes to our end dates and rate changes to our new and existing customer product ranges.”
These alterations will come into fruition immediately and will include significant upsurges for buy-to-let loans, with some products rising by up to 1.57%. There are also smaller increases for other products, which you can find the details for here.
According to BBC, rates are fixed at around 6%, with 1.5 million households set to come off fixed deals in 2023. What does this mean for landlords? Well, lenders have raised rates to match the current climate, as well as removing varying deals from the market. This means that landlords will no doubt experience lower numbers of customers due to the larger money figures involved. Because of this, we’re bound to see a growing number of assets being placed onto the market as landlords look for an escape away from the current climate.
With a lower number of customers on the market, brokers will be looking to maximise their reputation and retention as much as possible to combat the rising pressures of finalising business. Source’s systems, such as Source Go provide a straightforward, hassle-free service, which can positively reflect on you and your reputation as a result. A happy customer is a returning customer!
Source have been helping their clients find the perfect protection for over 25 years. In 2022, we enhanced our landlord offering to ensure our landlords find the best insurance policies for their properties. You can take a look here to find out more.