Monetary Policy and Interest Rates

In response to inflationary pressures, central banks may implement monetary policy measures, such as raising interest rates, to cool down the economy and stabilise prices. Higher interest rates increase borrowing costs for businesses and consumers, reducing investment and spending. Conversely, lower interest rates stimulate borrowing and spending, boosting economic activity but potentially fuelling inflationary pressures.

Changes in interest rates influence mortgage rates and financing costs for property purchases, renovations, or refinancing. Higher interest rates increase mortgage repayments for homeowners and may deter prospective buyers from entering the property market, leading to reduced demand for flats and potentially lower property values. Conversely, lower interest rates make homeownership more affordable and may stimulate demand for flats, driving up property prices and rental yields.

Why does this matter for your service charge budgets? Well it may have a huge impact if you are working on a new build development. You’ll need to have detailed conversations with your client on how they plan to fund the budget if a development is going to take longer than expected to fully sell.