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Thursday, June 10, 2010

Where next? Interest rates

Property finance costs are the single largest cost for most landlords. Therefore, landlords making decisions about their rental business are obviously watching intently the future direction of interest rates.

A useful indicator about likely future interest rates is given by swap rates. These indicate the markets expectations of the level of interest rates going forward. Here are a list of future rates provided by thisismoney.

June 7

• 1.18% in one year

• 1.50% in two years

• 2.55% in five years

The change in one-year swap rate shows how markets now see a near-term rate rise as far more likely. The one-year swap has hit 1.20% having been only 1.05% in mid-April and as low as 0.83% at the end of 2009. It has eased back on fears that the euro crisis will led to a double-dip recession.

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