Bank of England – base rates down 1/4 %
Posted by markharrison on December 7, 2007
Yesterday, the Bank of England monetary policy committee cut its base rate by .25%.
It’s already been reported that the larger domestic (ie – NOT buy to let) lenders are going to pass on this rate cut in full (which, frankly, I’d have been appalled if they didn’t.)
However, for those borrowers, particularly Buy To Let borrowers, whose mortgages are tied to LIBOR rather than the base rate, the news isn’t so good.
The markets are still making money very expensive, so the lenders who are re-borrowing the money they lend as mortgages on the open market are still finding this a lot harder.
I’m getting increasingly concerned about the UK economy next year – over the last few years, I’ve held off making predictions, but I think we’re in for a rocky time, and “effective repossessions” will be up.
What do I mean by “effective repossession” – it’s a (not very good) term I’ve coined to mean ACTUAL repossessions PLUS “distress sales to avoid repossession.” If more and more people are selling their houses at 20% below open market value, in exchange for a rapid sale, to avoid repossession, and the investor market has got a lot better at buying these things, rather than letting the lenders repossess, does it REALLY mean that repossessions are down?