Would UK Interest rates staying low until 2014 be a good thing for investors?
Brett Alegre-WoodChairman, YPC Group
Hey guys,
The latest report from Ernst & Young's Item Club reports that UK interest rates will have to remain at their record low level for the next four years.
Would long term low interest rates really be good for investors?
At first thought, such a freeze would be welcomed by borrowers, who will enjoy lower mortgage and other loan repayments, but would be bad news for anyone who relies on an income from savings.
Are you interested in long term profits, passive income of £500-£1000 each month — and complete financial freedom from investing in UK properties?Sign up for my brand new, free online property course to learn the proven way to use property as a vehicle to achieve financial freedom as the recession eases and confidence grows.
This is the very same information many have paid thousands to learn! It's valued at £199 per year and each week, I'll teach you everything I've learned while building the portfolios of thousands of my clients over the last 15 years. Learn from my experience and avoid making the mistakes I made!
You'll learn all this and more in just the first 3 weeks of this course:
 Plus, a special bonus: you'll receive Brett's regular video updates, delivered straight into your inbox, where he turns on his video camera and decodes the week's property news for you!
|
Join our newsletter list for FREE today and you'll receive as a bonus a complimentary PDF copy of Brett Alegre-Wood's best-selling book The 3+1 Plan!
You'll learn the safest time-proven strategies that will guide you and grow your portfolio during any economic boom, bust, recession or downturn.The 3+1 Plan is a step-by-step guide that will show you how, with just four properties, you will be able to fund the lifestyle you have always wanted. Even before you retire! Immediately you register for our newsletter we'll send you the PDF download link for this award-winning book so you can start reading right away...
| ||||||||||||
| |||||||||||||
The low interest rates, it argues will be necessary to counterbalance low inflation as the Government's spending cuts come into force.
Andrew Goodwin, senior economic advisor to the Item Club, told Sky News: 'The VAT rise will keep inflation rates high in the short term, but come 2012 I would expect inflation to be well below the 2% target.'
Ernst & Young's Item club believes this will happen as the effects of VAT and high energy prices wear off - and spare capacity in the economy affects companies pricing decisions and employees' wages.
This prediction does contradict the view in the City and at the Office for Budget Responsibility (OBR) that interest rates will start to rise next year.
Pressure for an early interest rate rise increased last week after GDP was estimated to have grown at 1.1% in the Q2 2010.
What does it mean for investors?
BUT; what does it all mean for investors, certainly low interest rates is a good thing for investors.
Well not quite, you see while we have low interest rates due to depressed GDP the economy won't see full recovery, businesses won't want to invest in the future, they won't employ more staff, they will effectively be in 'defence' mode.
So at some point we want GDP to increase, slowly and gently, this will then mean rates have to rise but at least the economy will get back on its feet.
It's almost a case of having to go through some pain, either a dull and long term pain, which will see house prices remain subdued, lending subdued and the market subdued, or a shorter, sharper pain.
The problem may be through that if we take too long the dull pain becomes a permanent fixture for the next generation, or too quick the pain is too great and we dip again.
Cash flow is still king...
It's a quandary for which that no-one has the exact answer! My money is on slow and steady way out rates will rise next year but not too fast. This is why you must make sure you are putting aside the extra cash flow now in order to be ready should interest rates kick off in 2011/2012.
Call the team on 0207 812 1255 and they can talk you through all the changes that affect your portfolio. It's important to get the full information as they media is already starting to have a field day.
Live with passion,
Brett Alegre-Wood
Reader comments for the article 'Would UK Interest rates staying low until 2014 be a good thing for investors?'
You're invited to join in the discussion of this article. Do you have advice to share? An opinion or some feedback that adds to the discussion? Feel free to add it below! (Please note though that ALL comments are checked before they're posted.)
Brett reporting from Malaysia, should we open up an office in Malaysia?
How will the Euro affect you as an investor?
Is it realistic to have cashflow positive investment property 100% of the time?
How Much Capital Do You Need To Get Started In Property Investment?
How Quickly Should An Investor Build Their Property Portfolio?
Brett reveals London's newest, still-unknown hotspots in new video