Two elderly mayflies were chatting: “You don’t get Sun now like we used to. When we were lads we used to get proper yellow Sun, not this red Sun – and it was much higher in the sky”*
For us of course: Tomorrow is another day and the Sun will again be golden yellow and high in the sky! But for the mayfly, that day is their universe. It really is all a matter of perspective!
Much could be said the same as the current interest rate environment. Two rate rises have happened in the last three months and the consensus is that the Bank of England will make three or four more increases this year. This marks the most significant and rapid change in interest rate policy in over 10 years.
But even after taking into account these increases, the current interest rate cycle is likely to peak at between 1.5% and 2%. Whilst interest costs are an important part of the development cost stack, the forecasted rates are a far cry from the peaks of prior cycles and the sun will keep rising!
Stuart Parfitt, Managing Director, BLG Development Finance
*with credits to Terry Pratchett – Reaper Man