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3rd December 2008 | back to article listings BACK    print this article PRINT

The pre-Christmas period may be for many a time to be rushing around and buying gifts for all the family, but for property investors the season may bring some gift-wrapped surprises from central banks.

In the UK, of course, many will be expecting a base rate cut tomorrow, with Lloyds TSB pre-empting the decision by announcing it will pass on any reduction. On the far side of the world, the Reserve Bank of Australia has unveiled a one per cent cut, its fourth in a row. All over the globe, it seems, central banks are looking to make cuts.

While such actions may lack the drama of the concerted measure by the Bank of England, US Federal Reserve, European Central Bank and others in October, it does appear that across the globe economists, business analysts, politicians and other stakeholders are sure that the world's economy is in a serious downturn and that inflation is yesterday's problem.

For those keen on investing in eurozone locations such as France, Germany or Cyprus, tomorrow could bring good news, provided of course - as in Britain - lenders are willing to lower mortgage products accordingly. The euro interest rate currently stands at 3.25 per cent. A Reuters poll has shown that there is an overwhelming expectation that this is about to fall. All but two of the 15 banks contacted expect a 0.5 per cent cut, as do the majority of the 81 economists it quizzed. A 0.75 per cent cut was predicted by two of the banks and 24 of the economists.

A reduction of 0.5 per cent or - if the European Central Bank is so bold - 0.75 per cent could therefore have a significant impact on mortgages. How much it may have on individual property markets and economies overall may vary, of course. Germany, for example, has a lower level of home ownership than other countries so its property prices may be least likely to be affected as a result.

Nonetheless, investors may have many prospects arising in Europe and the same could be true across the Atlantic. The Federal Reserve holds its next board meeting on December 16th, with the consensus in a Bloomberg poll this week being that the Federal Funds Rate will be lowered by between 0.5 per cent and 0.75 per cent. The latter move could leave the rate at just 0.25 per cent.

Whether that will happen remains to be seen, but investors in markets on either side of the Atlantic may be watching closely for developments, with potential prospects emerging in many places.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4520.html. Alternatively, please see our full press release archive.

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