Low base rate "great" for borrowers - buy to let mortgages

12 February 2009

A prolonged period of low interest rates could be "great" for borrowers - such as holders of buy to let mortgages - as it will help to reduce repayments, it has been noted.

Chief economist for Lloyds TSB Corporate Markets Trevor Williams stated that if the Bank if England continues to cut the base rate, people will save money on outstanding debts and any new debts they may take out.

"It would be great from a consumer spending perspective if the cost of paying for a loan gets as low as it possibly can," he remarked.

Mr Williams said that although low interest rates can discourage people to save, they also encourage them to spend, something that "can help to create conditions that could eventually lead to recovery".

Earlier this month, the Bank of England's monetary policy committee voted to trim the base rate by 0.5 per cent, meaning it now stands at one per cent.