Jamie Boot, group managing director of Henry Boot, says interbank lending rates must come down to give housebuilders some respite from the credit squeeze.
Speaking as the company announced strong results in the year to 31 December 2007, Boot said mortgages would only become more available when the LIBOR (London interbank offered rate) came down.
Last week it jumped nine basis points to 5.93% amid concerns over liquidity, which compares to the Bank of England rate of 5.25%. The LIBOR is set every day by the British Banking Association, together with representatives from 16 banks.
Boot said: “Although any interest rate cut would be welcome, it’s the real cost of money that needs to come down.”
Although any interest rate cut would be welcome, it’s the real cost of money that needs to come down
Jamie Boot, Henry Boot
As a result of fewer land transactions last year Henry Boot announced a 12% drop in turnover from £142.3m to £124.8m. Despite the fall, pre-tax profit rose 14% to £46.5m.
Construction contributed £77m to turnover and the property and land development business £48m.
Boot said he felt “sanguine in a tough market”. Despite the group’s exposure to the property market, this was balanced by long-term public sector framework deals with its construction arm, he said.