Property Investment Guidance

Here’s why waiting for mortgage rates to drop before investing in property is a big mistake 

Here’s why waiting for mortgage rates to drop before investing in property is a big mistake

With the news of mortgage interest rates falling from their highs of 6%+, many people have decided that they should wait for the interest rates to drop further before they invest their money into property.  

And yes, on the face of it, this seems like a great idea – why would you want to invest when rates are the highest we’ve seen for a long time?  

However, here are 3 reasons that will make you reconsider waiting.  

Reason 1: You could miss out on grabbing a discounted property 

Over the last few years, there has been a lot of confidence in the property market and low mortgage rates, so property prices have been increasing, making it harder to find good deals and even harder to get discounts. 

But now because of economic uncertainty, high mortgage rates and people just generally feeling a little apprehensive about buying property, there are fewer people buying = less demand, so prices are coming down.  

Before, when demand was high & prices were sky-rocketing, a property which was listed at £150,000 was actually selling for £160,000 – £10,000 above asking! 

Now because of less demand, that same property will be more likely to sell for around £140,000 – a £20,000 price difference from a few years ago. 

By taking action and buying now, you can secure these types of discounts and save yourself some serious cash!  

But these opportunities won’t be around for long.  

At the moment, the masses are holding onto their cash and waiting for interest rates to fall, but if and when this does happen, demand will increase, forcing prices to increase.  

Do you want to buy property whilst there’s a discount available, or wait? 

Reason 2: Missing out on another year of capital growth 

A popular property investing quote is..  “It’s not about timing the market, it’s about time in the market”  

This is referencing the main benefit of investing in a property – the longer you stay in the market and hold your property, the more it increases in value and therefore, the more your wealth increases.  

The great thing about purchasing a buy-to-let property as an investment is that over time, it increases in value, simply by holding the property.  

This is why you will hear every property investor say they wish they had bought more property five years ago!  

By waiting for the perfect time to invest and not taking action now, you’re missing out and you won’t be benefitting from the capital growth.  

Reason 3: You’re wasting your time waiting for interest rates to return to record lows 

Since the last recession, the Bank of England base rate has been very low, meaning mortgage rates were also very low.  

The optimists are waiting for the interest rates of 2-3% to return before they invest in property. But guess what, this is very unlikely to happen and here’s why.  

These rates are unsustainable for a healthy economy in the long term and the Government have eventually realised this! Higher mortgage rates are helping the BOE & the UK government get inflation under control so it’s unlikely that we’ll see them again in the immediate future.  

A more reasonable level for the base rate would be around 3%, leading to mortgage rates of 4% or 4.5%. This is a much more realistic and sustainable figure.   

But don’t forget, while mortgage rates are higher than we’ve seen for a while, rents are also at an all-time high and this looks set to continue.   

This increase means landlords are not hit by the rate hikes and can still make a profit from their properties. For example, on one of the properties we sourced for a client a few years ago, it first rented out at £650 per month. It’s currently rented out at £900 per month due, in line with local market rent increases and in a few years, this will be around £1400 per month.   


So, if you’re considering investing in property, you have two choices – you can either wait for interest rates to come down which is a utopia unlikely to ever happen..  Or you can model your property investment deals at 4.5% and buy now, taking advantage of the many discounts that are available, sky-rocketing rents and capital growth! We know which option we’re choosing.. 

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