Interest rates and the housing market
Interest rates will not cause a major difference to the housing market, Savills explains why and investigates further.
Director of Savills, Yolande Barnes commented: " Base rate reductions have little impact in a situation where mortgages are being severely rationed. Lack of funds, high arrangement fees and high variable rates mean that the effective average mortgage rate is likely to remain little changed for the average borrower and some borrowers will face big hikes when fixed rates come to an end".
The firm predict that credit will not be a major problem towards the end quarter of 2008; many companies will be able to offer a broad range of credit.
Yolande Barnes spoke further: "The value of development land has fallen dramatically in the first quarter of 2008."
The main victim of the downturn has been, and will always remain, turnover. The extraction of funding justifies that the largely deals will not take place. "We predict that turnover levels throughout 2008 shall be between 25% and 30% lower than in 2007 in any event" Barnes suggests.
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