Interbank lending rate reaches record low!

Wednesday 3rd June 2009

The interest rate at which banks lend moneyLow Interbank lending rate to one another has fallen to a record low.

Across the US and the UK, mortgage officials have witnessed significant drops in their Libor rates, signaling what they believe to be a positive turn in the lending market.

How does this affect mortgages?

More than you think.

The Libor rate (the London Interbank Offered Rate) helps determine the cost of mortgages, business loans and general household loans, so any fluctuations – up or down – will affect how much banks are willing to lend.

When the financial crisis first hit, the Libor rate shot up as banks perceived lending to one another to be riskier.

However, during the last 3 months, the lending market has taken a turn for the better. Why? Because the Libor rate has dropped to 0.66% in the US and 1.3% in the UK.

With such significant drops in place, better mortgage deals are now appearing on the market.

Why has this happened?

With the government implementing a range of different actions to help get banks lending again, these various acts have helped to bring the Libor rate down. Yet despite this positive move, the Libor rate still has some way to fall before it reaches the same rates it was prior to the credit crisis.

Before the recession, this rate was only a few tenths above the Bank of England’s base rate – which in the current climate is only 0.5%.

Compare this to the above figure of 1.30%, and the Libor rate still has a substantial way to go before it properly collates with the Bank of England’s existing base rate.

How can this information affect you?

Simple. Like any homeowner you are looking for the best mortgage deals for your rental properties, so the better interbank lending is, the more promising their mortgage options will become.

Yet you don’t have to wait for the Libor rate to catch up with the Bank of England to successfully invest.

By using the Property Mentor Finance Team you can take control of your property investments and gain access to a team of financial experts who are equipped to help you find the best mortgage deals in all financial climates.

More importantly, by attending the 2 hour taster session, you will learn how to invest in these properties using little, if any, of your own money and make property a long term profitable asset.

Interested in learning more about property investment can benefit you? Why not attend one of the 2 hour taster sessions to find out more.
 

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