3 month LIBOR continues to ease slowly

There will be a limit to its downward movement towards the end of the year as those banks with 31 December year ends preserve cash on their balance sheet and let creditors rise accordingly. Effectively it may not go much below 3% in the short term yet with Base Rate at 2% it needs to get going again early in the New Year as pressure for another 0.5% cut down to 1.5% rises on the back of ever declining economic data.

In more rational times the MPC would wait until the retail sales figures for December were available along with preliminary January Sales from the major high street stores as well as the Quarterly inflation figures ahead of the February MPC meeting. But these are extraordinary times and with many retailers already having Sales in November and December, I am left wondering what they have left to discount come January - indeed, with rising unemployment and general consumer nerves, will anyone be out spending anyway ???

So a cut to 1.5% in January might even be followed by a further cut of 0.5% in February bringing BBR to a historical low of 1%. There will be little purpose to driving BBR even lower as bizarrely this may start to push SWAP rates up as the prospect of inflation will bring forward the time when rates start to go up again. Far better to provide a longer period of stability within which borrowers in all walks of life can source attractive fixed rate Buy to Let mortgages at all time lows.

Buy To Let lenders have a few products below 5% (the best is currently a 2 year fix from The Mortgage Works at 4.49%) but this number should increase in January. 

Another encouraging sign is the number of products on our Buy to Let Sourcing System (now branded Morgage Flow) has risen in the past week to 109 different morgages. We expect this number to grow from mid January onwards........