The majority of our clients are local business owners and from most of them the story is the same: despite their long term satisfactory history with their bank, the bank does not want to lend to them on their proposition, either at all or enough.  Property development, investment property and licensed trade are the three usual areas of rejection but anything needing a speedy turnaround, young businesses and assistance in tricky situations, such as paying tax or paying off partners, do feature regularly.

What the high street banks appear to want is trading businesses, preferably large trading businesses, plus profitable businesses in healthcare.  Within these sectors the banks often have dedicated, experienced teams and their pricing can be aggressive.  Agriculture is popular, too.  When big numbers are involved the banks will throw intelligence and resources at providing assistance; smaller enterprises struggle to get much attention at all.  Whether this will change as the TSB becomes more commercial or when the new Williams and Glyns is launched next year remains to be seen but for the moment many businesses need to look elsewhere.  More on this in “Where now for business finance?”

The residential mortgage market remains as price competitive as ever, particularly when it comes to short term deals.  What we are now also seeing, however, is more flexibility on some of the recent sticking points.  A minor credit default no longer rules out an applicant with every lender; more lenders accept the share of company profits rather than salary and dividends in assessing the income of family company directors, and more types of income are accepted for employees.  With more products being offered for those with small deposits and various Help to Buy schemes available, the residential mortgage world is quite inviting.

So, too, is the Buy-to-Let mortgage market.  This has been the growth market of 2015 and with yields so high, looks like remaining so for the rest of the year.  New lenders coming in are providing more opportunities for first time landlords, borrowers unable to show substantial incomes, houses  in multiple occupation etc.  Interest rates are getting finer, arrangement fees are getting lower, the age at redemption is getting far older and there are very few situations which can’t be handled at attractive rates.

Short term lenders continue to be the most innovative and there is a seemingly endless stream of newcomers to this market place.  Pricing is coming down across the board.  A loan which 12 months ago would attract a rate of 1.35% per month may well now be charged less than 1.0%.  Arrangement fees which are often 2.0% of the loan have been scrapped by some lenders and there are several novel repayment profiles which reduce the overall cost.  Moreover, there are significant improvements to the product offerings besides price, terms up to 3 years instead of 12 months, lending for speculative property development (without the firm exit preferred by short term lenders)  and higher loan-to-values, to name but a few.  The continued reluctance of the high street banks to lend on unusual propositions and their failure to move quickly ensures a constant demand for short term finance; and the banks’ continued failure to pay worthwhile rates on deposits ensures there is a constant supply of funds from short term lenders.