A new generation of buy-to-let investors could benefit from rising interest rates and the increasing number of repossessions that have resulted, according to My Mortgage Direct.
The mortgage broker claims that some buy-to-let investors who bought property several years ago paid over-inflated prices and will likely have to sell their property at a loss.
Cath Hearnden, director of My Mortgage Direct, says: “Following the recent interest rate rises we have seen an increase in enquiries from purchasers of investment properties being offloaded by owners who can no longer afford to keep them.”
During what My Mortgages Direct describes as the ‘buy-to-let boom’, three years ago, some investors paid high prices for new build properties. In a low interest rate environment these properties were viable buy-to-let investments but, as rates have risen, the gap between mortgage payments and rent have made the investments unsustainable, according to Hearnden.
The offloading of these properties has presented a good opportunity for buyers, who can pick up properties cheaply and will further benefit if interest rates go down.
Hearnden says today’s investor is more considered, better informed and less willing to pay any price.
“There is still mileage in property investment but not for anyone and everyone. With analysts predicting a surge in mortgage arrears and bad debts associated with mortgages, becoming a landlord will not be quite as easy as it has been in the past”, says Hearnden.
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