Search
 

Turmoil on Financial Markets Threatens Property Deals

LONDON-Despite UK base rates falling to a 40-year low in the wake of the attacks in the USA, property investors are facing problems obtaining finance because of a lack of liquidity in the long-term interest rate swap markets.

By Graham Parker | Updated on September 21, 2001

LONDON-The turmoil in the international financial markets following the attacks on New York and Washington last week has had a knock-on effect for the property sector. A number of large investment deals about to close are facing delays because of a lack of liquidity in the long-term interest rate swap market, according to Brian Laxton, Head of Corporate Finance at Healey & Baker.

The Bank of England cut its base rate by 25bp on Tuesday to 4.75%, a rate not seen since the early 1960s. This followed Monday’s 50 bp cuts by both the US Federal Reserve and the European Central Bank. US base rates are now at 3.00% with European rates at 3.75%.

Superficially, cheaper money is good news for debt-driven property investors, but according to Laxton borrowers are currently unable to take advantage of the new rates. Lenders are generally not providing fixed interest rate quotes beyond ten years, because there is temporarily no liquidity in the long-term interest rate swap markets. ‘In recent days this has affected some property investors due to complete on geared transactions, a problem that will only be alleviated once liquidity returns,’ said Laxton.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.