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Euro boost for France and Cyprus

10th November 2008 | back to article listings BACK    print this article PRINT

The last few weeks have seen some dramatic events in the realm of monetary policy. Not content with joining other central banks early last month in a co-ordinated 0.5 per cent rate cut, the US Federal Reserve lowered its cash rate by the same amount on October 29th. The Bank of England has followed up with its own further slashing last week and then the European Central Bank (ECB) took its cue.

On Thursday 6th November the ECB revealed that it was cutting its rates by 0.5 per cent, with the minimum bid rate - the equivalent of the UK base rate - lowering from 3.75 per cent to 3.25 per cent.

Such a move may have many consequences. For one, it will lower the comparative value of the euro against other currencies from what it would have been had its rates not also been cut. Moreover, there is also the effect on mortgages. While it is the case - as in Britain - that not necessarily every bank will pass on the cut, those mortgages that track the rate will of course automatically do so.

This last fact has been pointed out by French property specialist firm VEF, which expects a significant change in market sentiment to occur in the country as a direct result.

It stated: "Last week's cut in interest rates will increase demand for French property, and we are already starting to see the effects with a 120 per cent increase in the amount of clients booking appointments this week, compared to the same time last week."
Of course, such a reduction may not just benefit France, but the whole of the eurozone, with a potential increase in buyer interest in countries as diverse as Germany and Cyprus.

Indeed, the cut may have helped to reinforce the market in Cyprus, which only adopted the euro as its national currency on January 1st this year. The Royal Institution of Chartered Surveyors' Global Real Estate Weekly said last month that this has benefited the country in two ways. Partly this is because the euro has decreased the risk of financial instability. It also said the co-ordinated 0.5 per cent cut made by the ECB and other central banks around the world would help further boost an economy and property market that have weathered the credit crunch well.

Based on this second point, Cyprus should get yet another positive movement in the right direction thanks to the latest reduction.

So with money becoming cheaper, now may be a better time to be an investor than it has for months. The French and Cypriot markets may both gain substantially from this, creating plenty of buyer opportunities that could be well worth looking out for.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4475.html. Alternatively, please see our full press release archive.

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