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Friday, November 07, 2008

Interest rate cuts - will not mean bargain mortgages yet.

Landlords are greeted this morning with the lowest interest rate in 55 years and with the chance that rates will go even lower to 2.5 even 2%. Unprecedented in recent UK economic history.

Where do professional landlords go for their buy-to-let mortgage?

Great news one assumes given that every 0.5% cut slashes almost £42 off a landlords interest costs per month on a £100,000 buy-to-let mortgage.

However, anybody can see that an economy that has to slash it's borrowing costs by a third in one go is in desperate straights.


These cuts will not unfortunately loosen the banks 'purse strings' which is what landlords really need in order to be able to access the terms of credit they became used to over the last decade. I'm afraid only one thing will do that. TIME. In TIME bankers will forget about the credit crunch, they will forget about forthcoming depression, they will forget house prices can go down as well as up. They will only see; profit, big bonuses, shareholder demands and market share. Then landlords will once again get great rates and a huge choose of buy-to-let mortgage products.

How long?

How long will landlords have to wait? Probably another decade or so before memories fade sufficiently. I look forward to landlords reminding me of this post some time in 2018 to see if I was right.

Until that time landlords will need to scrap hard in what is left of the wreckage of the buy-to-let mortgage market to find the best deals. One just hopes that the banks who have been partly culpable for the whole credit crunch debacle have the decency to pass on at least some of the Bank of England's desperate cut!

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