Why the interest rate cut is good for property investment

The recent interest rate cut by the Bank of England from 0.5% to 0.25% is good for property investment. Whilst it is not great new for savers, the fact that lower interest rates will make bonds and savings less appealing could see a potential reallocation of money from these asset classes into the more profitable property sector.

 

It may also be good news for the UK construction industry because lower rates of borrowing could potentially lead to more developments taking place and more off-plan investment opportunities.

 

The strong demand for housing in the UK and the cut in interest rates spells good news for buy-to-let investors who, with lower interest rates and consistent yield performance, will now see their profit margins go up. Overseas investors can also benefit if they are able to borrow in sterling to fund their UK property purchase.

 

Finally, the low interest rates will lead to more affordable buy-to-let mortgages being available, stimulating the property investment market even further.

 

6 August 2016
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