Knight Frank Daily Update Friday 17th July
Are interest rates set to go negative?
2 minutes to read
Good morning,
Need to know
Economists at some of the biggest banks expect the Bank of England to take further action to revive growth in coming months, particularly if the autumn wind down of government support schemes causes unemployment to rise.
Goldman Sachs said Bank of England officials may signal in August that interest rates could turn negative, Bank of America is expecting the base rate to go to zero from 0.1%, and Royal Bank of Canada says the central bank could be forced to take the rate negative as early as November.
Hopes of more government spending around the globe continues to fuel markets, offsetting concerns over the spread of the virus and worsening tensions between the US and China.
The US broke its single-day record for new cases yesterday, with the tally hitting more than 75,000.
Virgin Atlantic will resume passenger flights next week with trips to Hong Kong, New York and Los Angeles. The carrier is expecting a slow recovery in air travel with demand set to take three years to return to 2019 levels.
The property market
We're seeing mortgage rates globally reach or surpass record lows as central bank policy responds to the outbreak by pushing borrowing costs lower.
New mortgage applications through Knight Frank Finance soared 75% between May and June. Borrowers at 60% LTV can currently access 2 year fixed rates as low as 1.09% and 5 year fixed rates of 1.36% on loans up to £10 million.
The average interest rate on a 30-year fixed-rate mortgage in the US has fallen below 3% for the first time ever. This move has pushed confidence among US homebuilders back to pre-pandemic levels.
We talked yesterday about wealthy investors ploughing billions into stock markets to buy the dip at the onset of the pandemic. In a new Intelligence Talks podcast, Anna Ward takes a closer look at family offices and private investors to understand how they’re responding to the outbreak.
Knight Frank's head of global capital markets research Anthony Duggan says family offices are looking increasingly like institutional investors, and are developing risk appetites to match. That means we're seeing a shift from more entrepreneurial strategies towards lower but more stable return profiles. Listen on Spotify, Acast or Apple.
Property markets in Asia-Pacific are gradually seeing the return of cross-border viewings and sales as travel is reopened. Mengjie Shi has this summary of the current travel rules between key markets.
Flora Harley brings together the latest global economic indicators to draw conclusions as to the trajectory of the recovery.
Finally, a joint study by Knight Frank and law firm Irwin Mitchell reveals more than half of local authorities in England do not have clear planning policies in place to support the development of retirement housing.
Any questions, please contact me, or the team.