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Interest rates
European CRE finance industry gets mixed signals on interest rates in the face of the UK’s EU referendum
Negative interest rates implemented by central banks are driving up the costs of real estate lending, the Commercial Real Estate Finance Council (CREFC) Europe has warned.
As 2015 ended there was a lot of discussion about the direction for property in 2016 particularly in the UK where the question was whether the market has peaked.
The much anticipated increase by 0.25 percentage points to a range of 0.25 to 0.5 percent will have no impact on commercial real estate, according to industry experts.
The Bank of England should not raise interest rates just yet and should maintain its quantitative easing (QE) programme to encourage bank lending, an audience at Real Estate Capital’s Europe Forum 2015 heard this morning.
In his keynote address to more than 130 real estate finance professionals, Dr Gerard Lyons, chief economic advisor to London City Hall, said the risks to the UK economy of raising interest rates outweighed maintaining the status quo.
The Federal Reserve’s latest Monetary Policy Report points to rapidly rising commercial property valuations amid stronger demand for loans and eased lending standards.
CREFC Europe is organising a seminar focused on interest rate hedging as the prospect of a hike becomes increasingly more likely.
A rise in long-term interest rates is unlikely to impact significantly on property yields, according to a new study published by the Investment Property Forum.