Bank of Japan introduces negative interest rates
Surelock Network Auctions February Newsletter
Welcome to Surelock Network Auctions’ February Newsletter! In recent weeks there has been a lot of interesting news to digest and consider. While not all of it directly affects the housing market or the property auction business, some news simply cannot be ignored!
Bank of Japan introduces negative interest rate
In a surprise move in the final days of January the Bank of Japan announced it was introducing negative interest rates. This is the latest in a series of attempts, spanning a number of years, to stimulate spending and boost the Japanese economy.
While Japan’s Central Bank won’t charge consumers for holding savings, they will begin charging banks and other financial institutions 0.1% for any cash they park overnight that is above the required financial safety net. The hope is that banks will be more inclined to lend and invest and consumers to spend due to the meagre 0.1% returns currently on offer to them for any savings.
Not too long ago there was talk that the UK’s Bank of England might consider cutting interest rates to negative. As things stand, that is now a highly unlikely scenario. However, with global economic growth and demand expected to slow, the likelihood that interest rates will rise this, or even next year, is fading. Indeed, it isn’t inconceivable that BOE governor Mark Carney will become the first BOE governor to preside over stable interest rates during his term since Thomas Catto in the 1940s!
For now though, UK interest rates look set to remain at 0.5% for at least most of 2016. That means mortgage interest rates should remain low – good news for property buyers requiring a mortgage.
Will pensioners begin cashing in their pension to invest in property?
Last year pensioners were granted greater access to their pensions and expectations abounded that a new generation of buy-to-let investors would begin work. So far, however, that hasn’t been the case, despite record low interest rates spawning low mortgage interest rates and a very wobbly alternative in the stock market.
While economists and financial analysts have been confident it’s just a matter of time before the pensioner landlord explosion, a survey suggests that isn’t likely to be the case. The majority of existing landlords surveyed by the National Association of Landlords in mid-2015 said they had no plans to access their pensions to expand their BTL portfolios. In fact, 25% said they planned to sell-off some properties and 3% said they would sell their entire portfolio upon hitting retirement age.
The new stamp duty taxes for buy-to-let investors due this year is further clouding expectations for the buy-to-let market and views over whether or not pensioners will use their lifetime savings to become landlords. If pensioners do take the leap and choose to invest in property, the results will likely be mixed; while some could make a success of their new role, others might not be so lucky. A lack of knowledge combined with an unlucky purchase could jeopardize a pension income further down the line for some.
Housing takes centre-stage in 2016 London mayoral campaign
The two main London mayoral candidates have set out their campaign stalls and the lack of residential property across London tops both their plans should they gain office.
Labour mayoral candidate Sadiq Khan and Conservative candidate Zac Goldsmith have both pledged to increase house building across London. Mr. Khan plans to create a London planning office to help push property applications through more quickly for affordable homes. Both Mr. Goldsmith and his rival, meanwhile, have said they will introduce rules to give Londoners first refusal for any new homes built in the capital.
This is certainly an election race worth watching, particularly for the property investors among you!
We hope you enjoyed Surelock Network Auctions’ thoughts on the issues discussed in our February newsletter. If you want to keep up-to-date with Surelock’s auction dates visit our website and to keep abreast of our news and views, take a look at the blog section. And, watch this space to find out about property market views you can listen to on our Auction Breakthrough podcast, which will be available on iTunes soon.
We welcome any comments on the points we have mentioned, or any questions at all, even about a property you are interested in that isn’t listed at one of our auctions. Additionally, if you want to share your own views on another topic, please contact us. You can get in touch by responding to this email, tweeting us @KhalidAuctions or commenting on the blog section of the Surelock Network Auctions website.