US Inter – Bank Lending Rates

There has been much deliberation over the last few years on when inter-bank lending rates in the US are going to increase. It is looking likely 2016 will see a rise now that unemployment rates have dropped further in October 2015 to just 5%, the lowest level since April 2008 with job gains in occurring in professional and business services, health care, retail trade, food and drink services and construction.

The number of part time workers has fallen from 33% to 21% and wages appear to be rising year on year by 2.5%, with an inflation rate that looks to remain at 0% until the end of the year the wage increase will have a real impact. Further to improved economics at home, foreign markets are stabilising and domestic equity markets are at a record high. 

Heidi Learner states that the “longer – term rates today should be equivalent to current and future short rates, plus a liquidity and term premium” and that interest rates have already seen an increase in anticipation of inter – bank lending rate hike. The key question for many real estate developers and investors is will this increase borrowing costs? Andrew Ingram a surveyor at Morgan Pryce believes, “this is dependent on whether overseas investors take advantage of potentially higher yields along with a stronger dollar.” Presuming the improved economic conditions continue an increase in rates are unlikely to negatively impact commercial real estate markets. 

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.