14:47 PM, 27th October 2010, About 12 years ago
Buy to let mortgage borrowers can breathe a sigh of relief for another month as the Bank of England’s Monetary Policy Committee has voted to keep the official bank rate steady at 0.5%.
The decision means the bank rate has remained at the record low of 0.5% for 18 consecutive months since March 2009.
In March 2009, the cut was by 0.5% from 1%.
The general feeling is the rate will stay pretty much the same until well in to 2011 unless significant economic factors, like the rate of inflation, drastically change.
The committee also voted to keep the programme of asset purchases financed by central bank reserves at £200 billion.
The most recent change in the programme was an increase of £25 billion to £200 billion on November 5, 2009.
The minutes of the meeting will be published on September 22, so analysts will have to wait to see whether the balance of opinion within the committee has shifted from previous months. Once available these minutes will be accessible to read in full by subscribers to Landlord News.
Cutting the bank interest rate is widely seen as a brake on inflation, so the inference from the bank’s decision to remain steady is that inflation is about where economists and business want it to be.
Keeping a rein on increasing wages and prices encourages growth in the economy, which is still fragile after the recession.
So far, no banks or building societies have adjusted their interest rates – and if anything there is room for them to cut margins on mortgages as many have done in recent days.
Expect more competitive pricing for short-term fixed rate mortgages as the bank rate enables lenders to borrow more cheaply.
Meanwhile, the National Association of Estate Agents (NAEA) is upbeat about the housing market despite passing through the annual holiday time doldrums.
The number of people registering with agents to look for property fell on average from 292 in July to 250 in August. The number of sales made by the average branch also dipped slightly, from eight in July to seven in August.
Over the longer-term however the market remained in a similar position to 12 months previously. A particular positive was the fact that the supply of housing appears to have recovered. The average agent had 69 properties on its books, up very slightly from 68 the month before.
NAEA president Michael Jones said: “Year on year, it does not appear that there has been a drop off in activity. However the next couple of months will be telling. The market appears relatively flat at the moment, which we expect during the holiday month of August. We would expect some indication during September and October as to which way it is likely to go, before we get the traditional pre-Christmas slow-down.”
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