Interest rates could see savers turn to buy to let
Tuesday 31 May 2016
Plummeting interest rates could see people turning to the buy-to-rent market to boost their security, experts have said.
Savers relying on their pension pots will be worse off than ever before with new record lows in the rates, caused by the Bank of England slashing its base rate during the credit crunch.
Despite hopes that the situation would begin to improve, it has deteriorated further and is affecting Isa’s and easy-access accounts particularly.
Perhaps more importantly, the precarious state of the Bank of England is certain to worry those relying on their dwindling savings or pensions and nest eggs to see them through retirement.
On the flip side, the news will be welcomed by those with additional mortgages, making it cheaper to borrow.
With little light at the end of the financial tunnel, the incentive to buy a second home to help provide security will now look even more attractive.
This comes despite the controversial introduction of a 3% hike in stamp duty and the equally-unpopular plans for a reduction in tax relief set to be phased in from 2017.
Frustrating times for savers
A spokesman for the British Bankers' Association said: "These have been frustrating times for savers.
"The Bank of England's base rate has remained at a record low for several years.
"While this has been good news for borrowers, it has fostered a low-interest-rate environment which has not been easy for many savers to bear."
And while anxious savers brace themselves for more financial blows, the buy-to-let market is surely a far more sturdy and tangible option that can lead to a regular income stream.
Mortgage broker Adrian Anderson, of Anderson Harris, said: "People feel comfortable investing in bricks and mortar.
"It is familiar, they understand it and many have made significant gains in recent years on their own home."
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