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Buy to let insurance policyholders' mortgages 'should remain affordable'
26 Jul 2010
Posted by Jonathan Walker
An extended period of record-low interest rates would result in mortgages continuing to be "very affordable" for those with sufficient deposits, according to real estate firm Savills.
The latest Ernst and Young ITEM Club forecast predicted that interest rates would be unlikely to rise from their current level of 0.5 per cent until at least 2014, provided that the government goes through with its proposed cuts.
Peter Spencer, chief economic advisor to the group, said that such a low base rate will soon begin to "look like the new normal".
Lucian Cook, director at Savills, suggested that the expected low rates confirm that the mortgage market is now underpinned by people's ability to access an adequate deposit, rather than their capability to afford a property loan.
He said: "In the current environment, it is not whether they can service the mortgage; it is whether they can raise the deposit to move. There has been a shift from mortgage interest affordability to deposit affordability."
