Rate rises hit property investing

2 March 2007

New evidence suggests that higher interest rates have put investors off sinking their money into property. According to the insurance company Standard Life, the three rates rises since last summer have prompted people to question the wisdom of investing in property.

A survey for the company suggests that confidence in investing in property has dropped back to the level of January 2006 – while confidence in ordinary savings accounts has risen.

The survey asked 1,523 people if it was a good or bad time to invest. Standard Life says there was a significant increase in the proportion of respondents who believed that now was a bad or very bad time to invest in either their own homes or in buy-to-let properties.

Some property experts have claimed that the rising cost of borrowing with a mortgage means that new buy-to-let investors may find the income from their properties does not cover their mortgage repayments.