When the FTSE burst through the 6500 mark earlier this year I was asked for a prediction of how it would end up as 2007 came to a close. I voiced my opinion that it would still be hovering around the 6500 mark. Well perhaps I will not be far wrong. At close of play on Friday the FTSE 100 was sitting at 6434 and unless there are huge volumes traded over the last few days of the year there is a good chance that it will creep nearer to my prediction.
The Bank of England meets again mid January and, depending on how the Xmas retail figures look, I should think they will adopt a wait and see policy before taking another 0.25% off the Bank Rate in February. Despite these cuts in Bank Rate it is going to take some time for these to be reflected in mortgage rates and it will be a particularly difficult time for those who are coming to the end of a set term for fixed rate deals.
Despite the gloom in the property markets there still has been plenty of growth in equity markets, provided as always, you have been in the right place. Those invested in property funds will need to think carefully about riding out the storm. Even if you want out you may have to wait as gates are closing and redemptions are being deferred as a result of the rush out of this class (£400M+ in Nov). Friends Provident are the latest to announce that they are imposing a six months waiting period for redemptions on their property fund. With many other property funds going onto a bid to bid basis previous advisers are sure to be tested on the risk warnings issued with their recommendations for investment in this class!
Roll on 2008.
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