Rates 'could fall to 0%' - buy to let mortgages

04 November 2008

It is possible that interest rates could drop to as low as one, or even zero, per cent over the coming months, it has been suggested.

Michael Baxter, an economist for financial information firm Defaqto, has highlighted the fact that rates are now at one per cent in the US - and the UK could be set to follow its lead.

Commenting on Britain's interest rates, he said: "There has got to be a very good chance that they will fall to zero. I think there are a lot of parallels between the UK and US economy."

Such a drop in the base rate could be positive news for those with buy to let mortgages as it would make the cost of borrowing cheaper.

The US Federal Open Market Committee announced on October 29th that it was lowering rates by 50 basis points to one per cent.

Its reasons for doing so were the slowing pace of economic activity and the likelihood of financial turmoil restricting spending.