Interest Rate Rises, When, Why, How and What does it mean for you - Daryl Norkett
With all the talk of inflation recently we thought it would be sensible to delve into the mechanics of interest rates and why and how they may increase, when that may happen and what that can mean for different assets as well as investors and developers. Who better to Join us for this than Daryl Norkett.
Daryl is a Director of Lendwell and has had a long career in banking with Barclays and Shawbrook and is a wealth of knowledge on all things Lending.
In this episode we discuss;
With inflation still below the 2% target is a rate rise likely?
The difference between Banks and Lenders.
How the P&L of a loan/ mortgage works.
Why different types of lending platforms can increase risk.
How lenders price risk and how that has changed.
How interest rates affect mortgages.
The different costs associated with mortgage and lending rates other than BOE interest rates.
The different types of Development loans and which are more affected by rate rises.
Other concerns for developers.
When and why interest rates may increase.
House price growth or negative growth.
The property market and affordability and how the banks are regulated to how much of their loan book can be stretched above affordability.
Wage inflation and rent growth.
How much debt is there in residential property in different areas and how will those areas be affected by a rate rise vs others.
How the tenant type of investment properties may be affected by rate rises.
Price disparity between London and other parts of the country and why that matters.
How Bank Of England looks at House prices and their importance on the economy.
When and why property owners may crystallise losses.
Why timing the market is important when leverage in concerned.
...And lots more...
Knight Frank sighted the below report from the BOE and said "A one percentage-point increase in rates, “all else equal, reduces house prices by around 2% to 11%, with the majority [of analysis] suggesting a drop between 6% to 9%.”
https://bankunderground.co.uk/2019/09/05/houses-are-assets-not-goods:-what-the-difference-between-bulbs-and-flowers-tells-us-about-the-housing-market/
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