Libor rates fall

According to David Whittaker of Mortgages For Business one of the UK's leading buy-to-let mortgage brokers the 3 month LIBOR rate which influences heavily the rate which buy-to-let lenders are prepared to lend to landlords is falling. Latest figures from emoneyfacts have it at 1% above the base rate. This is well down on the 1.5+% margin we have seen at certain points during the year but also a long way off the 0.1-0.15% which was considered normal before the credit crunch struck.

David comments that :

"There will be a limit to its downward movement towards the end of the year
as those banks with 31 December year ends preserve cash on their balance sheet
and let creditors rise accordingly. Effectively it may not go much below 3% in
the short term yet with Base Rate at 2% it needs to get going again early in the
New Year as pressure for another 0.5% cut down to 1.5% rises on the back of ever
declining economic data."

Propspects for interest rates next year

He then goes on to talk about interest rates for next year.

"In more rational times the MPC would wait until the retail sales figures for December were available along with preliminary January Sales from the major high street stores as well as the Quarterly inflation figures ahead of the February MPC meeting. But these are extraordinary times and with many retailers already having Sales in November and December, I am left wondering what they have left to discount come January - indeed, with rising unemployment and general consumer nerves, will anyone be out spending anyway ???

So a cut to 1.5% in January might even be followed by a further cut of 0.5% in February bringing BBR to a historical low of 1%. Buy To Let lenders have a few products below 5% (the best is currently a 2 year fix from The Mortgage Works at 4.49%) but this number should increase in January.

Another encouraging sign is the number of products on our Buy to Let
Sourcing System (now branded Morgage Flow) has risen in the past week to 109 different morgages. We expect this number to grow from mid January onwards........ "