7 November 2008
Mark Jenkins, director of Nationwide Commercial, comments on the decision by the Bank of England to reduce the bank base rate by 1.5%:
In cutting rates much further than predicted, this decision will undoubtedly stun those market commentators who thought a 0.5% cut was the best possible outcome today. However, base rate aside, there remains two key factors which will continue to influence the commercial property market going forward. Firstly, the willingness of banks to lend to each other, most notably measured by LIBOR rates, will continue to impact on the level of funding available for transactions. Secondly, while this substantial reduction should ease the pressure on tenant covenants, there is still a lot of uncertainty around possible tenant failure, and so the cut may not be sufficient enough to allay the doubts of expectant purchasers to the point that they are willing to commit to funding.
For further information, please contact:
Lucinda Devine
Communications Manager, Nationwide Commercial
020 7826 2188