Rate cut tipped before end of year - buy to let mortgages

21 August 2008

A cut in the UK base rate before the end of 2008 has been forecast by economists, something that could lead to a reduction in the cost of buy to let mortgages.

Yesterday's publication of the Bank of England's monetary policy committee (MPC) minutes for August showed no change from July's voting pattern, with all the members retaining their previous position including Tim Besley still being the only person wanting to raise the rate and David Blanchflower being the sole supporter of a cut.

Commenting on this, Jonathan Loynes of Capital Economics said it is unlikely that the majority will switch to voting for a cut very soon, but said with inflation peaking and the economy slowing this would happen later in the year.

"We still think rates could be falling by year-end and will eventually drop much further than the markets expect," he concluded.

Lehman Brothers economist Peter Newland was another to forecast a cut later this year.

He told Interactive Investor he expected to see "the first of a string of rate cuts in November".