Buy-to-let market slows after interest rate rise

29-Nov-2006

First time buyers may find property investment a less attractive option, after new data suggests that the buy-to-let market has slowed as a result of recent interest rate rises.

According to a survey published by the Royal Institution of Chartered Surveyors (Rics), property letting grew at its slowest rate since the second quarter of 2005 as first time buyers and more established investors reacted cautiously to recent interest rate rises.

Survey data suggests that around six per cent of chartered surveyors reported a rise in letting instructions, a seven per cent fall from the previous quarter.

"The recent interest rate increases have painted the buy-to-let market as a less than favourable investment," said Jeremy Leaf, a representative from Rics.

"With profit margins potentially reduced, affordability conditions could bite hard into investor's pockets and push up rents if interest rates rise further in 2007," he added.

In related news, interest rates have peaked and do not need to rise further, according to a report published by the Organisation for Economic Cooperation and Development.

To find out how to get onto the property ladder by buying to let somewhere else click here.

First time buyers concerned about how an increase in interest rates might effect how much they would have to pay each month should consult a good broker.

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