Whilst the national and international headlines are still dominated by post-Brexit analysis, the Bank of England’s latest move of cutting interest rates from 0.5% to a new historic low of 0.25% has stolen the spotlight somewhat in recent weeks. This is the first cut since 2009, and many throughout the business community are unsure about what the lower rates mean for the economy and more specifically their own company as numerous financial experts have labelled the cut an ‘unwarranted’ move.
Leading chartered surveyor and estate agent Mallard Property Group is one market leader that has deemed the cut unnecessary and after their continued commentary prior to and post Brexit, their Director is determined to shed some light on how the dwindling interest rates are good for business.
“While I echo that the interest rate cut was needless, despite claims that this step is necessary to sustaining growth and employment, I must admit that it could be a good move for borrowers and people looking for a mortgage only if the banks pass on the same rate to their customers, which in the majority of cases is already seeming unlikely. In fact, of late some of the UK’s biggest lenders have sneakily risen mortgage rates, a move that is already having a major impact on first time buyers in particular,” said Jason Williams, who is also a member of the Royal Institution of Chartered Surveyors (RICS).
The increasing cost of mortgages provided by various UK lenders outrightly defies Bank of England Governor Mark Carney who said that they have “no excuse” not to pass on recent interest rate cuts.
Despite the pre-Brexit panic that brought a property market outside of the EU into question, locally our departure has resulted in no change, with the trend of static prices and stock shortages remaining the same. But the Mallard team see great things for the months ahead, as Jason explains, “Summer is always a quiet period for the property market, and September will see an improvement. It’s all too easy to blame Brexit for any conditions experienced at present but that attitude will change over a period of time. If utilised correctly the reduced interest rates should encourage savers to invest in property and realise better value on their savings.”
In the press the reduction of interest rates is having very much the opposite effect and has already been perceived as an attack on savers and in particular the grey market. At present there is no evidence of an impending recession, as whilst there is a widely reported slowdown, trends are also pointing towards improvement as people come to terms with life outside of the EU.
“Theresa May seems to be leading from the front and as she stabilises the government people’s perception of the UK’s management of Brexit and the way ahead is becoming clearer. In regards to opposition, the presence of a strong rival party still remains a problem that needs resolving as soon as possible. Another key factor is the current value of the UK Pound, which is ironically good for manufacturing and exports. Early indications suggest that worldwide economies including the USA, Canada, India, Germany and the Commonwealth have indicated Free Trade opportunities with the UK. In short, the business world needs not to panic, just settle down and get on with it – we’re still open for business, and so are you,” concluded Jason.