Photo by Resolution Property Investments

This month marks our first rate drop since March 2020, sparking a lot of excitement among investors. So, what can we expect moving forward? In this update, I’ll share my predictions for the rest of 2024 and offer advice on how to make the most of the current market conditions.

What will happen to interest rates now? 

This is the big question, and I have already had clients asking what rates will go down to, and if there are any good products now available. This is likely to be a small change, if any, and the longer term predictions haven’t really changed (we are still expecting a slow downward trend), so it’s unlikely we will see big changes. We will probably see shorter term rates staying similar, and perhaps a slight reduction on the 5 year fixed rates. 

Fixed rates are based on the current swap rates, and these have already been falling so we have seen a slight reduction from some lenders already. Other factors are business volumes and what funding they have available, and that’s got nothing to do with base rate at all, so there are lots of factors at play when we see rate changes.

Take advantage of a more positive property market 

I think this is a big one for the remainder of the year. There is likely to be more movement in the residential market (which makes up the majority of transactions), and that in turn will create more movement for investors. More properties on the market means more negotiating and more options for you all. We are seeing plenty of opportunities in some areas already, but equally lots of clients are struggling to find property at the right price, and this should help. 

I have read many articles saying that property transactions in the second half of this year will be around a third up on the first half of the year, and with potentially more rate reductions to come from the Bank of England, it could be a great second half of the year. 

Make sure you’re still buying at the right price 

With the excitement of lower rates on the horizon it’s easy to get excited about purchasing property. Maybe you’ve had a break while rates have been high, or you’re waiting to buy your first one, and you’re now ready to go with some positively on the horizon. Either way it’s key to keep that purchase price at the right level. 

Your GDV and refurbishment costs will generally stay the same, so the key to making a good profit is buying at the right price. Always work back from the end point, and be realistic with that end point, to see where your cap needs to be. Don’t make emotional decisions, they never end well! 

Keep an eye on your power team

With the market so busy, and things expecting to get busier, it’s key to know you’ve got everyone ready to go around you. Solicitors and valuers are close to capacity, and with the holidays now upon is this is likely to become more of a problem! It’s more important than ever to check the team around you before you commit to purchasing, particularly where there’s a time restriction too. 

As always, staying calm and steady is the best approach. While it’s easy to get excited about positive news, remember that slow and steady wins the race!

Feel free to get in touch if you’d like to arrange a call or have any questions.

About the Author:

Ellie Broadhurst is a specialist mortgage broker working at Baya Financial in partnership with The HMO Roadmap. She works with HMO property investors throughout their journey, from clients starting on their first project through to experienced portfolio landlords and developers. Learn more about Ellie here.