Bank cuts base rate to 1.5% - buy to let mortgages

09 January 2009

Interest rates have been cut to a historically low level following the monthly meeting of the Bank of England's monetary policy committee.

The base rate has been slashed by 0.5 per cent, taking it down to 1.5 per cent, in a move that the Bank attributed to the "unusually sharp and synchronised downturn" in world economies.

Business and consumer confidence has also "fallen markedly", the Bank noted, adding that the falling level of inflation was also a factor in the decision.

Keshav Thukaram, the managing director of Smartlandlord.co.uk, said that the move is "potentially good news" for those with buy to let mortgages.

He stated that landlords with tracker deals will automatically benefit from the cut, adding: "This will help improve rental yields and increasingly the rents will cover the mortgage payments."

But he warned that property developers must take heed of falling house prices that could impact the returns on their investments.