Predictions for 2009 - An Insight from Mortgages for Business...

Many leading financial institutions with a 31 December year end will have adopted the well practised approach of hording cash on the Balance Sheet on the final day of 2008.

In normal times they would unwind these positions in January and LIBOR and Bank Base would be closely matched by the month end. However with the prospect of another 1% or more Base Rate cut in January on the back of deepening economic gloom the opening meeting of the MPC (announcing on Thursday 8 Jan 2009) could boost the premium even further in the short term.

However this will lead to further reductions in SWAP rates and lenders will start to roll-out new domestic and Buy to Let products in the coming weeks. The issue may well be that "demand exceeds supply" so Mortgages for Business advises brokers to ensure that they know what their clients are looking for. This prepared strategy should prevent disappointment if lenders come to market only with limited tranches. Brokers can then notify clients when funds are launched that suit their purpose.

2009 will be an interesting year with some good opportunities - the NAEA are predicting a property spike already as there could be a shortage of stock with very few new homes coming out of the ground.

David Whittaker, Managing Director, Mortgages for Business - 6th January 2009