Bank of England – no change is a good change, or something…
Posted by markharrison on November 8, 2007
Well, another month passes in which the bank rates don’t move up.
This is, overall, good news for property investors, but there are two things worth bearing in mind:
- The Base Rate is NOT set to look after the property market. It’s set to keep inflation in check, and property plays a part in that, but isn’t the whole story. It’s a common mistake among investors in any asset class to assume that the BoE will set rates based on keeping their type of investment in line…
- Most lenders are charging a much higher premium over Base Rate than they used to. This is because a lot fewer banks will lend money to each other, full stop. And most mortgage lenders, in fact, are borrowing the money from someone else. The fewer “back-end” lenders, there are, the less competition… the less competition, the high margins those that remain charge, and the higher margins get based on to use property investors
So, about the best we can say is “there wasn’t particularly bad news today”… but that’s a long way from saying that things are on the up. It’s more important than EVER to think carefully before purchasing property as an investment, and make sure you’re getting good advice.