What effect will Barclays rate fix Scandal have on the property market ?
Hi I am back again because yet another Bank has allegedly been involved in conduct which may be considered to be unethical and or illegal.
I want to discuss with you the effect that this allegation may have on the UK Property Market be it the Residential or commercial sectors.
In order to discuss this it is important to understand what interest rates are and how they effect the lending criteria.
On Question time last Thursday 5th July 2012 a member of the audience asked a question and it was interesting to note the posturing that went on while no one really answered the question itself presumably because of the allegations of conniving between the Civil Servants ,the Politicians in Westminster together with the Bank of England and Barclays Bank itself.
The interest rates effect the cost to the Banks of borrowing from other Banks-The Money Market and Central Banks. They also affect the cost to the consumer be it Businesses or individuals to borrow from the Banks themselves. It is important here to understand that some of the money we are talking about is YOURS as depositors of money into the Banks which effectively costs them only very simplistically the rate of interest being paid to the depositer which in some instances is less than 1%. The lending rate to you ie the cost of borrowing is in excess of 5% so you can already see the advantages to the Banks of being able to control or “fix” the interest rates
So what effect will all this have on the market?
Well initially it is my view it will have little or no effect certainly in the short term however in the longer term it may have an effect on prices that can be achieved for freeholds and the Rent that may be obtained for leases of business premises.
I welcome your comments even if you have a differing view as healthy discussion is always important if only to agree to disagree.
Many thanks for reading my thoughts. Until next time cheerio