End of a le Crunch…

Is this the time for le lending and is it the end of a le crunch?

If you are a slave to the libor rate or if you have a mortgage and are interested in knowing what the money markets are likely to be doing, then your ears should have pricked up, when last week the libor rate fell to 0.55% which is only just a fraction over bank base rate currently at 0.5%. The importance of the libor rate is clear for all to see when with perhaps a little bit of an explanation in so far as during the 15 months the libor rate has been probably some three percentage points above the bank base rate, this therefore means that the rate at which banks lend money to each other was at the depth of the recession recycle, twice the cost of the base rate and obviously in that situation no bank was going to lend money successfully and certainly no bank was going to borrow money at a rate or a price that they could afford.

The lending rate between banks coming into line with the base rate is perhaps one of the best signals so far that the credit crunch is over, and we are coming up the other side. When the base rate and libor are there or thereabouts banks will start lending and banks will start borrowing.

The clear underline revelation of all of this is that banks have realised to get back to making money they need to lend money and to be in a position to lend money they have to have access to money!!

The libor rate is the rate therefore at which the money goes round and if money is being lent, money is being borrowed, money is been utilised by the market and the banks are making money, then the money is no longer theirs but everybody and the money in circulation will stimulate not only the economy but the housing market.

Staniford’s prediction for 2010 would be to see an increase in the money supply through an increase in the number of mortgage products and that in itself will stimulate growth in the mortgage market linked with a realisation and a necessity that loan to values particularly associated with products for first time buyers will be relaxed, and the percentage of loan to value will increase, this in itself will serve to stimulate a property market that is already  trying to get off its knees and back onto its feet.

Find out more about property for sale in Beverley and morgage products availible to you – visit Stanifords or call – 01482 631133