Commenting, David Whittaker, managing director, said: “All eyes are now on the 3m LIBOR rate and it will be interesting to see how the money markets react. 3m LIBOR yesterday stood at 3.79% and likely to be around 3.72% today. What we need now is for the gap between Base Rate and LIBOR to continue to narrow although it may still be a few months before we go back to the traditional spread of 15-20bps.
“Our in house mortgage product sourcing system has instantly updated the full range of products available to reflect the Base Rate drop, and today’s Base Rate reduction is great news for those on Base Rate tracker mortgages although with some lenders, collar conditions may now apply. Halifax has announced that they will not be implementing their collar and will pass on the full 1% cut to their Base Rate tracker mortgages. Other lenders may follow suit.
“It would not be a surprise to see a further cut early next year before rates level out and then start to increase slowly in 2010. SWAP rates continue to fall and provide an indication of the cost of longer term money and suggest that early next year could well be the right time to lock into a decent 3 or 5 year Buy to Let fixed rate mortgage. What is certain is that in the lead up to Christmas and despite yesterday’s Base Rate cut, we are unlikely to see any real movement in mortgage products until January at the very earliest.”
