Have you stress tested your finances taking in future base rate increases?

[nmb]

Even though the US authorities recently increased base rates it seems that few other central banks will follow in the short term. The Bank of England recently suggested an increase in UK base rates was now unlikely before August 2018 and four expected US rises this year have now been discounted.

However, base rates will rise eventually – have you stress tested you finances at higher base rates to see how your net income would be impacted?

 

[Nicholas Wallwork]

Yes I stress test my portfolio every 6 months or after new acquisitions. In fact my commercial lenders require it along with a certain debt coverage ratio.

I have a large portion of the portfolio now covered by 20 year fixed rate (and repayment) loans so risk is managed and minimised wherever possible.

I'd highly recommend investing for yield and to ensure that higher rates are tested before buying...

 

[nmb]

Is it possible that a return to "traditional mortgage rates" could potentially prompt a new banking crisis in the UK?

 

[Judith Beilby]

The rise in mortgage rates to "normal rates" will be slow and well sign posted. The market could not sustain a quick turnaround. China reporting static growth has prompted discussions of bank weakness. Lets hope those bankers have learnt a few lessons from mistakes of the past!

 

[nmb]

History shows is that many investors have short memories when it comes to learning lessons from issues in years gone by - does greed get the better of some investors?

I agree with your sentiments regarding banks, we can only hope they have learned from their mistakes in the past!