/24-7PressRelease/ - LONDON, UK, August 08, 2008 - It is widely predicted that the Bank of England's Monetary Policy Committee (MPC) will hold the base rate steady at 5.00% when it announces the outcome of its deliberations on 7 August.
Neil Young, CEO of Property Portfolio Managers, Young Group, comments; "As ever, the MPC is engaged in a delicate balancing act between keeping the base rate at an appropriate level for the current economic conditions and ensuring that inflation is held in check. Inflationary pressure is at a level such that the MPC could not reduce the base rate without running serious risk of inflation pulling further away from the Government's target of 2.00%.
"Inflation is the principal focus of the MPC, so the widely held view that they will vote to hold the base rate at 5.00% should be no real surprise."
"Base Rate Has Little Impact on Buy-to-Let Mortgages"
Mortgage rates, particularly for buy-to-let mortgages have not been closely correlated to the Bank of England Base Rate for some time. Indeed, in only the last month, despite the base rate being static at 5.00%, tracker rates for buy-to-let mortgage products from well known lenders have dropped three times, some by a total of 0.60% and for the first time since the early part of this year, stand at below 6.00%. On an average interest only mortgage of 200,000, this represents a saving of c. 100 per month.
Neil Young goes on to point out, "It's encouraging that some of the largest lenders have reduced the interest rate on buy-to-let mortgages. It shows that they're 'open for business' and actively seeking new mortgage instructions. This is another indication that the mortgage market is returning to some level of normality, following the industry's clampdown in the wake of last year's credit crunch.
"Investors who approach property investment in the same way that they would any other asset class will be looking at the overall trend in interest rates rather than short term fluctuations.
"The effect of last year's credit crunch resulted in mortgage funding becoming more difficult to come by as lenders, rightly, tightened their lending criteria and increased the due diligence process on applications. But, a purchaser with a good credit history and a realistically priced property has always been able to find good mortgage products from lenders.
"Although the conditions created by the credit crunch have made it more arduous and time consuming for those seeking funds for property purchases, the shake out in the mortgage market will doubtless result in a stronger and more robust market. It is encouraging to see sense coming back to the market."
About Young Group
Young Group specialises in providing Property Portfolio Management services to private investors, identifying the best off-plan opportunities in London on their behalf and managing the entire investment process - from sourcing the property through to financing, furnishing and letting.
Young Group is a wealth manager with a focus on property as an asset class. Young Group owns all the property it sells, and also retains a number of properties for its own portfolio. As the principal in every transaction, Young Group does not realise any profits until completion, giving investors 100% confidence that properties will 'value up' and that financing will be secured.
Young Group has transacted in excess of 1,500 apartments, with a retail value of 630m. The majority of our units are bought by clients for their private portfolios. The Group's lettings division, Young Lettings, has successfully let all investors' apartments within a week of completion.
For each property exchange, Young Group donates 50 to Children with Leukaemia, the UK's leading charity dedicated exclusively to fighting Britain's biggest childhood cancer through pioneering research, new treatment and support of children with Leukaemia and their families, and to Norwood, the Children and Families First charity which provides support to families facing social difficulties.
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