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Property owners foresee 2010 base rate rise

Property owners foresee 2010 base rate rise

Category: Mortgages

Updated: 06/01/2010
First Published: 06/01/2010

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Property owners foresee a slight rise in the cost of borrowing over the next 12 months, with three in four expecting a rise in the base rate of interest.

The latest Young Index shows that 76 per cent of respondents expect the Bank's rate to be higher than it is now (0.5 per cent) by the end of 2010.

While the measure is expected to rise, there is little expectation of major movement. Only six per cent of respondents think it will have risen to more than two per cent, well below the long term average of five per cent.

"Certainly in the short term, the Bank of England's Monetary Policy Committee is unlikely to make any significant change to the base rate," Young Group's chief executive officer, Neil Young concurred.

The average base rate expectation for the fourth quarter of 2010 is 1.1 per cent – just 0.6 per cent more than it is at present.

Other headline results from the survey included 99 per cent of landlords intend to hold onto their residential property investments over the next 12 months, while just under half (49 per cent) said they planned to do so for the next decade.

There also seems to be growing sentiment that the property market recovery is gaining greater pace in London compared with the rest of the UK.

Fifty-nine per cent of landlords said they were considering purchasing property in the capital in 2010. Less than half (43 per cent) planned to look at other opportunities in the UK outside London.

Furthermore, 76 per cent of respondents predicted rising property values in the capital, compared with 60 per cent who said the average price of a home would go up in the rest of the country by the year's end.

Earlier this week, the Royal Institution of Chartered Surveyors said it expected an increase in the base rate in the second half of this year.

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