Base Rate static - so what's next ? 18.01.2010

Author: David Whittaker Posted on: 18 January 2010

 

Leading the pack is the Gov't who will cling on to any bit of data that can woo the electorate in what is now presumed by many to be a 6 May election. They will claim that maintaining BBR at 0.5% shows how the consumer is being assisted through these hard times. But they also need to prove that the economy is recovering which will of  course introduce inflation. Not even Gordon Brown can square that circle.

Almost perversely Cameron's team may see merit in BBR starting to rise before the election so that they can blame the trend on the outgoing government. Their challenge will be to prove their fiscal credentials, sorry did I mean cost cutting, so that growth is nurtured without burgeoning state expenditure.

Actually this is all beyond both parties and the markets are looking at manufacturing data which wobbled again in Q4, looking to see where that QE money is going to end up and whether our banks, bonuses not withstanding, are finally getting back to profitability on a day to day basis.....for the moment it has slowed down the rising trend on SWAP rates. Whilst RBS predictions of BBR still being at 0.5% at year end seem fanciful, equally other banks' positions at 2.5% or even 3% seem over done.....

In the short term continued stability will help the property and mortgage markets and with slight improvements in liquidity in Q2 and Q3 the real prices of mortgages should ease - this will be higher LTV and reduced margin and fees.

We'll send out Buy to Let mortgage product alerts for the best products - if you are not on our database to receive them click on this link now.