Interest rates have been raised for the sixth time in a row from 1.25% to 1.75%.
The Bank of England’s decision to increase rates by half a percentage point makes it the largest increase for 27 years.
The move is an attempt to slow the rate at which prices are rising. The Bank has warned that inflation could pass 13% later this year.
The last time interest rates were this high was during the global financial crisis in December 2008.
Why does raising interest rates help inflation?
Prices are going up quickly worldwide, as Covid restrictions have been eased and consumers spend more.
Many firms have problems getting enough goods to sell. And with more buyers chasing too few goods, prices have risen.
There has also been a very sharp rise in oil and gas costs – a problem made worse by the war between Russia and Ukraine.
One way to try to control rising prices – or inflation – is to raise interest rates.
This increases the cost of borrowing and encourages people to borrow and spend less. It also encourages people to save more.
However, it is a tough balancing act as the Bank does not want to slow the economy too much.
How do interest rates affect me?
Credit cards and loans
Even if you don’t have a mortgage, changes in interest rates could still affect you.
Bank of England interest rates also influence the interest charged on things like credit cards, bank loans and car loans.
The Bank’s decisions also affect the interest rates people earn on their savings.
Individual banks usually pass on any interest rate rises – giving savers a higher return on their money.
What does the commercial property look like right now?
According to industry research, UK retail footfall was up by 14.2% in June 2022 compared to the same month a year earlier. However, this was driven by the positive impact of the Platinum Jubilee Bank Holiday, where footfall increased by 8.6% compared to the previous week.
Retail property investment stood at £7.6 billion in the year to May 2022, compared to £7.5 billion in April 2022 and £6.2 billion in May 2021.
The industrial market has had a strong run for some time now, and total returns stood at 38.8% in June, although this is down on April’s peak of 43.0%.
Investment volumes for industrial assets stood at £18.2 billion in the year to June 2022. This is down on the £18.9 billion recorded in the year to April 2022, but well above the £7.7 billion figure for the year to December 2019.
Overall, there is still confidence in the commercial property market, businesses need a premises, much like people need a home. At BB&J Commercial, we have seen strong demand still in retail and land, with many businesses and developers in need of space.
Do you need assistance with the disposal of a commercial property? Get in touch with our team today on 01332 292825.