Interest Rate Rises

Higher interest rates have knocked investors confidence in putting their money into property, evidence suggests.
The insurance company Standard Life says that the rate rises since last summer have led more people to question the wisdom of property investment.

Its survey suggests that enthusiasm for investing in either one''s own home, or buy-to-let properties, has retreated to the level of January 2006.

However, confidence in ordinary savings accounts has risen.

The research asked a sample of 1,523 people if now was a good time or a bad time to invest in various investment categories.

Bad time to invest

There was a significant increase in the proportion of respondents believing that now was a bad or very bad time to invest in either their own homes or in buy-to-let properties.

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.

However, the most recent and authoritative industry figures, from the Council for Mortgage Lenders, show that 330,000 additional buy-to-let mortgages were taken out in 2006.

That was far and away the highest annual figure since the market for this sort of investment started a decade ago, and took the total stock of such mortgages up to 850,000 - 9% of the total mortgage market.