Inflation-driven increases in interest rates are continuing in 2022, underlined by the first back-to-back rate hike by the Bank of England since 2004.
Questions remain about monetary policy for the remainder of the year, and geopolitical tensions add to the uncertainty around both inflation and interest rates.
Lender sentiment for real estate remains positive, however, and we are continuing to advise our clients to:
- Stress test inflation/interest rate assumptions in business plans and investment/development appraisals
- Review hedging strategies to mitigate interest rate risk
- Consider alternative structures to offset increases in the cost of capital