CUTS IN MORTGAGE RATES FOR LONDON ARE UNLIKELY Thursday, 15th May 2008

The chances of more Base Rate cuts are unlikely for the foreseeable future. Charcol.

The Bank of England is now in a Catch 22 situation: leave the Base Rate where it is and the mortgage lenders, who are sorely needed to keep the property market healthy, are unable to source cheap enough funds to lend at affordable rates; cut the Base Rate, and inflation rockets.

If the ongoing program of Base Rate cuts is slow, so will be the recovery, however, if slower cuts results in more cuts being needed, homeowners on longer term trackers could potentially be the winners and see their payments steadily reduce by a percent and a half by the end of 2009.

The HomeBuy scheme, which formerly allowed key worker first-time buyers to part buy, part rent a property, has been expanded to allow all first-time buyers with an annual income of £60,000 or less, to apply for the scheme.

However, although the expansion of the scheme will allow many first-time buyers to buy a share of a property without a deposit, the HomeBuy scheme’s administration has not been well known for its speedy service in the past. Furthermore, paying a mortgage as well as rent each month, can often be more expensive than renting or buying elsewhere.