Musings of a London Property Finder

The Bank of England has cut interest rates by 1.5 percentage points to 3%.  Such a sharp reduction is practically unprecedented but members of the Bank of England’s Monetary Policy Committee have hinted on several occasions that a severe reduction in interest rates was likely.  Some pundits have suggested that interest rates could fall to close to 0% by the end of 2009 in order to ease credit restrictions.

Those with tracker rate mortgages should see the benefits quickly and the government will continue to put pressure on lenders to pass on the cuts to consumers on other rates.  Generally central banks refrain from lowering interest rates significantly because it tends to push up inflation as people can afford more, credit becomes less expensive and there is less incentive to save.

Consumer Price Index (CPI) Inflation rose to 5.2% in September, rising sharply from 2.2% since the beginning of the year.  The rapid increase in inflation this year has largely been attributed to rising energy and food prices, however commodity prices have started to fall and oil prices are down by over 50% from their peak so inflation is expected to fall back sharply, as retail energy and food prices decline.

Given the difficult economic situation at present, a reduction in interest rates is expected to alleviate pressure on the consumer purse, but not to the extent of adding to inflation.  The rate was decreased to assist the Bank of England achieve the CPI inflation target of 2%, set by the government in the medium term.

The government is keen to reinvigorate the housing market as quickly and painlessly as possible.  Hopefully this move today will persuade investors and first time buyers to enter the market and get things moving again as yields increase and the margin between the cost of rent and a mortgage narrows.  Keep reading the musings of a London Property Finder to keep abreast of mortgage news

Technorati Tags: Bank of England, Current Interest Rates, Inflation, Inflation expectations, Interest Rates, Interest Rates Fall, London Property Finder, Monetary Policy Committee

Tags: Bank of England, Current Interest Rates, Inflation, Inflation expectations, Interest Rates, Interest Rates Fall, London Property Finder, Monetary Policy Committee

Musings of a London Property Finder

Mortgage approvals for house purchases have risen for the first time in over a year following a record low in August.  The summer in general and August in particular are always slow in the property world but figures released from the Bank of England today show that the balance of money paid off mortgages outweighed those taking them out for the first time since the 90s.

Mortgage approvals are still approximately a third of rates before the credit crunch and the volumes of houses purchased is down 50%.

This glimmer of good news is not expected to affect the expected downward trend in interest rates with some expecting rates to fall to 2.5% by this time next year.  Buy while the going is good says the London Property Finder.

Technorati Tags: credit crunch, house purchases, Interest Rates, Interest Rates Fall, London Property Finder, Morgage approvals

Tags: credit crunch, house purchases, Interest Rates, Interest Rates Fall, London Property Finder, Morgage approvals

Musings of a London Property Finder

The Alliance and Leicester have cut rates for homebuyers with deposits by 0.55pts but reporting on City Wire today, Iain Martin says that a 25pts deposit is required to achieve the best rates.
Alliance & Leicester cut their loan to value ratio to 85pts from 90pts meaning that First Time Buyers need to come up with a 15pts deposit.  There are still lenders willing to lend 90pts of the value of a home.  The message to First Time Buyers should be threefold:

• Don’t buy if you can’t afford to
• Buy something you can afford comfortably
• If you haven’t managed to save/borrow/blag your 10pts deposit, you are probably not ready to buy.

For those who really want to get onto the property market and have the finances ready, this London Property Finder can find repossessions or other low value property which will perform in the short to medium term.

Technorati Tags: House Purchase Deposits, Interest Rates Fall, London Property Finder, Repossessions

Tags: House Purchase Deposits, Interest Rates Fall, London Property Finder, Repossessions