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27th April 2010 - Lloyds returns to profit

Lloyds announced that in the first Quarter this year they had returned to profits- and were performing better than expected. This is against the backdrop of increased pricing on loans and reducing exposure elsewhere- on non core sectors.

The Government is still sitting on a loss but … much less than before.

8th April 2010 - Interest rates remain at 0.5%

The BOE kept interest rates at their historical low today- having left interest rates at 0.5% since March 2009.

The Bank also decided not to pump more money into the economy- not yet at least. Some market commentators still feel the bank should be doing more- as the risks of the economy stalling are seen as higher than that of inflation.

24th March 2010 - Stamp Duty Cut

The chancellor has announced in todays budget that first time buyers will not have to pay stamp duty on the property being purchased if it has value less than £250k; but properties in excess of £1m will see see stamp duty raised to 5% next year.

26th February 2010 - The Lib Dems seem to understand the Banks are not lending

Vince  Cable and John  Thurso have both been commenting recently that the Banks are not lending enough to small businesses and that the Government must ‘ get a grip’ and ensure the recovery has every chance of making progress.

It’s great to see this issue being regularly raised by them; if funds are not available at reasonable rates and on reasonable terms businesses will remain cautious and assuming they can stay in business - will not invest in new equipment/ will not take on additional staff and given the Public sector should be downsizing – the growth has to come from this sector.

12th February 2010 - Base Rate Projections

Information received from a major high street lender suggests they expect base rate to remain at 0.5% until the end of the year then rising to 2-2.5% by the end of 2012 and c 4% by end 2012/early 2013.

Some economists have suggested rates will move up quicker than this- in view of inflation worries etc- although the general feedback seems to be the economy is really quite slow and rates rises is the last thing the economy needs currently. One thing is for sure- the Government will be praying rates stay low until after the election.

29th January 2010 - Barclays announces more help for the EFG Scheme

Barclays announced earlier this week a further £88m is to be made available to help SME’s. This is in addition to the £150m lent on the scheme last year to 1650 businesses ( average £100k each)

On this basis the bank will lend to another 880 businesses.  What isn’t made clear is if thats the budget for the year ( which is what 50% of last years figure) or in addition to another say £150m; either way whilst every little helps – providing less than 1 EFG loan for every branch in the country will not really make much difference

8th January 2010 - Interest rates remain at 0.5% for the time being

No change announced at the latest Bank of England meeting yesterday.

Whilst it is only a matter of time until rates do rise market indicators remain mixed at best and the ‘recovery’ remains fragile. The recent bad weather merely delays the country getting back to normal after several weeks of time off/disruption.

Five year fixed money is currently being quoted at 3.69% plus margin- so markets expect base rate/Libor to be around 3.5% in 5 years time.  Whilst lenders like applicants to take fixed rates if the bank is charging you 4% above -your current pay rate would be 7.5% pa compared to 4.5% pay rate if you take floating rates; guess which most applicants decide to do- thats right- they take floating where they can and take a chance that rates will go up slowly.


18th December 2009 - RBS and Lloyds to sell off 1000 branches

The European Union has demanded that the banks sell off almost a 1000 branches between them as a result of the large state aid they have received.  The banks have 4 years to sell them off  and Brands such as Tesco/Virgin have been mentioned as possible buyers to come in and compete with the high street banks. What services they will sell is open to conjecture at this point; Tesco can use its data on its loyalty card system and Virgin of course have some history with their Virgin Money offering.

In a different announcement RBS said it was was axing 3700 branch staff to cut costs; as ever this will be a balance between customer service and costs- something that hasnt always been got right in the past.

7th December 2009 - BTL arrears drop

The number of BTL mortgages with arrears more than 1.5% of the balance has fallen for the third quarter in a row and is now just over 20000.

A years ago BTL was expected to wither and die and see huge increases in arrears; however neither has happened and there seems to be a steady trickle of new BTL investors- mostly professionals eg doctors/accoutants etc. They obviously feel secure in their jobs and have surplus cash to form the deposit/good credit rating.

19th November 2009 - What is the size of the reduction in Commercial Bank Lending?

We all know that the commercial banks are risk averse and have reduced the amount of credit available;  I dont believe some of the PR given out by the banks about what funding they make ‘ available’  to businesses – the best data I have seen so far via the BBC- website provided by Thomson Datastream suggests bank credit annualised has reduced c 25% in 2009 year on year.  Frankly even this seems low- based on what we see- clearly it takes time to unwind say large developments and its easy to stop new lending whilst its harder to get repaid on existing debt. In reality I would expect to see the next lot of data show an even bigger reduction; we know Clydesdale/HSBC /Bank of Scotland are not lending; we know the others are very cautious and that a whole raft of non high street banks went bust or stopped lending- taking out further capacity.

The true size of liquidity squeeze for small and medium businesses remains a bit of a mystery and frankly a scandal. Recent Chamber of Commerce surveys suggested credit availablity remains the biggest hurdle for small businesses.

A small and faint smudge on the horizon may represent slightly better sentiment from lenders- several of our lender contacts suggests the mood is moving towards being more positive on new lending- nothing firm- but sentiment within banks may be swinging from ‘ No’ to ‘ we would like to be more accomodating .. not the same as opening the doors for sure but a step in the right direction. Lets see what the banks internal business plans come up with re targets for their staff next year.  I won’t get too excited just yet and suggest you don’t either.

13th November 2009 - Barclays Bank

Barclays seem to be active currently saying they are open for commercial mortgages ( owner occupied not investment ) . They were at Mortgage Expo and are busy making calls to brokers currently hunting for business.

Our perception is that they are not really lending- certainly cases we have tried with have come across all sorts of unexpected questions and concerns. If our brokers have any feedback here would be interested to hear.

8th October 2009 - Interest rates remain at 0.5%

Base rate remains o.5% ; no suprises- most commentators expect raates to increase next year to 1.5% by say October so we should see some months were rates remain at this historic low level.

Job losses remain an issue ( few businesses feel confident to hire; banks remain worries about effect of writing off loans will have on their liquidity ;rising tax bills and falling values all mean rates are unlikely to move far or quickly.

10th September, 2009 - Libor rates

Libor rates have sttled down to

1 month- 0.52% and 3 month 0.66%; this is great news- for it not only reduces existing borrowers linked to Libor it also means some of the disfunctionality between Libor and Base rate has been worked out of the system- meaning more normal conditions.  It also means short term no expectations of interest rate rises.

The FTSE closed up at its highest position last night since the ‘ recession’ began and confidence is building- despite concerns of ‘ double dips/ Government intervention finishing and job losses.


3rd September, 2009 - Lending to Businesses drops by record £8bn

The record drop in July is the biggest since records began in 1997- and shows just how tough it is for small businesses to raise money from banks and makes a mockery of the Banks claims they are supporting businesses.

Lending is down year on year by almost 3% – although I eould love to see how the numbers looked for businesses day employing less than 20 people- I bet the numbers would be drastically down then and suspect the figures are distorted by larger loans- especially on large developments that have had to be completed to avoid the banks losing even more money.

We have seen a sharp increase in the number of borrowers seeking help to negotiate with banks/buy more time or even to get the banks to listen to the borrowers problems and allow a realistic repayment plan. Certainly some of the borrowers are over leveraged or haven’t communicated well with their lender but many are being pressured by their lenders when the bank was happy to lend say 80% development costs and now of course there is no one else to refinance to.

21st August 2009 - Commercial First returning to the market?

CF may be considering a return to the commercial finance market before the year is out.  No details yet of what the offering will be or where it will be positioned. Hopefully there would be less requirements than the high street regarding historic trading information. It’s doubtful that there would be a full self certification option.


12th August 2009 - Commercial Investment

It seems that most lenders are turning away from Commercial Investment – and continuing to change their stress tests to ensure any new lending remains low.

Talking to lenders this last week it seems property caps are being talked about by more than two lenders and if we add that to the press comments/ results etc a picture builds that lenders remain reluctant to add more property on their books - and if they do its on very low loan to values. All of which means we continue on this deleveraging that is going to take some years to work through and will as finance remains tight- so we assume valuations will remain under pressure due to subdued demand.

There was some press comment over the weekend about institutional investors returning to the market for commercial properties where the rent was strong- whilst this helps the top end of the market it does little to impact lower down, as they probably don’t borrow (or not very much) and only taking best yielding properties.


4th June 2009 - Base rate remains 0.5% for the third month.


27th May 2009 - Commercial Lender Base is set to re-enter the market.

Good news for brokers and clients; Base Commercial has announced it will re-enter the commercial mortgage market shortly, funded by VC funds.

This is good news on several levels. Firstly, it provides more choice and more cash into commerical mortgage availability. Secondly, it shows that investors see the commercial mortgage market as a way to make money and this will help demonstrate there is both demand and product- helping to encourage others back to the market, hopefully sooner rather than later.

Full details of where the product sits/rates etc are to be announced shortly.


18th May 2009 -EFG Loan scheme

Latest reports (Dept of business) suggest that lenders are now using the EFG and have lent £186m to 2,000 businesses; great we all say.

This equates to c £96,000 each. Now if you need that money badly that will help, but imagine you have a staff of 10 then your wage bill is probably a minimum of 10k a month (could be far higher) plus all your other costs so whilst the numbers sound helpful (and they are) in reality its a drop in the ocean.

The agreeement to allow deferment of taxes has been very useful for businesses and 124,000 businesses have taken advantage defering some £2.2bn.


21st April 2009 - 3 month Libor 1.52%

Libor remains about 1% more than base rate and shows no immediate signs of the gap closing.

Some lenders are moving to Libor linked loans even for loans below £1m – so businesses feel they are not benefiting from the cheapest rates; however the margin above libor is usually less than base rate linked loans so the net effect currently is that the business is not being penalised. Much depends on how libor and base rates differ over the coming months and years and how far lenders will go to rebuilding margins.

9th April 2009 - Base rate on hold at 0.5%

The bank also successfully completed the purchase of some £3.5bn of gilts yesterday as part of its quantative easing - pumping more money into the economy.

Interestingly some bank managers have shared ( what is presumbly their own Economists thoughts) that rates will need to move upwards ’soon’ ; not clear how quickly and whilst we all recognise that they will, the ‘soon’ seemed somewhat more immediate than I would have expected; there seems no point in choking off any green shoots - if we have any…

Also of note is that some bank managers are saying privately to us that the mood is changing within the lenders; from 'no way are we lending’ to ‘ we must hoard cash’ to ‘actually we might just be ready to start lending again‘ and acknowledge there is real pressure on them to lend more ( HSBC announced today they were commiting billions to a new 90% resi mortgage as evidence perhaps they felt the worst was behind).

Let’s see what happens - but perhaps in all a good note to start Easter with.


5th March 2009 - Base rate reduced by 0.5% to 0.5%

Amazingly the UK base rate has changed again reducing down to 0.5% - remember rates had never been down below 2% before until recently and there is no precedent for the current rate.

In addition the Bank announced they would go on a £75bn spending spreee buying up UK Financial  paper/assets- in an effort to improve liquidity in the market. Can only help, but no one knows how effective it is and pundits are still debating whether it helped Japan or not.


9th February 2009 - Enterprise Finance Guarantee Scheme

Some lenders have finally gone live with the Enterprise Finance Guarantee Scheme (EFGS) and whilst full details/application forms are not yet available we thought you would want to hear about this scheme as quickly as possible. Please see Mike's blog (02.09) for further details.


5th February 2009 - Interest rates reduced to 1%: lowest ever

A reduction of 0.5% was announced today at noon. This is a total reduction of 4% since October when rates were 5 %.


8th january 2009 - Base rate reduced to 1.5%

This is the lowest ever interest rate since the Bank was set up in 1694 !!!


5th January 2009 - Lender update

Lloyds advising credit committee can take 6-8 working days !!
Abbey suggesting 70% is max LTV now for all sectors/property types ( down 5% ).
RBS seeking min 3.5% above Base on retail size loans.


4th December 2008 -  Base Rate down to historical low 2%

The Bank suprised some and delighted others with another cut, this time of 1% on Thursday. (savers less so although the credit constraints on lenders means savings rates remain higher than logically they should be).

Commercial borrowers should see the impact immediately as base rate linked loans will reduce. However it’s worth you mentioning to your clients that unless they ask for monthly/quarterly repayments to be reset the banks may well keep repayments as they are- which would ensure the loan was repaid quicker than it would have been otherwise- but the borrower would not benefit short term with additional cash. The key point of course of the rate drops has been to help businesses (and homeowners of course) but unless your debt repayments drop there is no visible benefit.


7th November 2008 - 3 month LIBOR 4.5% currently


6th November 2008 - Base Rate slashed to 3% (down 1.5%)

The bank has suprised everyone ( well done- it’s great that they still are able to do this) by agreeing a massive 1.5% reduction- the largest single move since independence.

Expectations were that the Bank would agree 0.5% although many people were hoping for 1% - but believed the Bank would not be brave enough…

Lets see how this impacts on Swap rates and Libor.


5th November 2008 - Last major non high street development funder pulls out temporarily

Close advised they had ceased all new business from yesterday - in view of market volatility but hoped to return to the market soon.

This means very few lenders currently are willing to support development deals - whcih means most builders will be in dire trouble once current sites finish; there is no liquidity and its hard to finance deals other than at low loan to values; Cash is king . Lenders are worried about end value/demand/and availability of mortgages. Fact is we all need to live somehwere and we know we are 000’s of properties short- we are stuck with one problem and creating another for a few years time.


October 2008 - Commercial finance deals

We have had good relationships with many banks and lenders over the years and it is very frustrating to see the Lenders being unable to lend; cases that would have sailed through even 6 months ago are being declined and sometimes for seemingly small/petty reasons. Bottom line- lenders are reluctant to lend and will find various reasons not to. Each case needs to be strong and well presented.

Even the banks' managers/business development managers do not know what cases will get agreed and are as frustrated as applicants/brokers. As ever- if the property is not in good location and in good condition ( definition of good being whatever the underwriter wants it to be) then the case can flounder.

All this means more time and effort on each case and less certainty of success.


8th October 2008 - Interest rates down 0.50% to 4.5% wef today

Good news finally- with bank shares in meltdown and the rescue packages being fleshed out- the Central Banks of USA/Europe and UK all reduced borrowing costs in a co-ordinated move.

3 month Libor was at 6.25% yesterday so it will be interesting to see if recent events can help bring this down. Until Libor reduces and banks are happy to lend again we are not going to make much progress.


30th September 2008 - 445 Mortgage Products lost Tuesday

According to Tuesday was the worst single day with 11 % of the available products being pulled leaving some 3500 products left available.

Add this to news that August was an awful month for mortgages - the worst on record- and you have a residential mortgage system thats all but stopped.


September 2008 - UK Lenders make raising commercial finance more difficult

We are seeing a hardening of Bank underwriters' stance on many new cases; the depth of questionning on quite straightforward cases is remarkable and demonstrates the fear that lenders have currently.

Frankly its a wonder any deals get away; Age/ location/quality of the property/perfomance of accounts/operation of personal bank accounts/level of credit card debt are amongst the many issues raised.

The lenders are also seeking every opportunity of increasing prices and know there are not too many options available to lenders - so can be demanding with their requirements. All this means the case needs to be clean- it will take longer and the valuation will be read through line by line…

Know your customer is a good maxim.


September 2008 - Commercial Lenders seem comfortable at max 65% on investment properties

Lenders seem to be holding commercial investment loans at 65% ltv and are not keen to do more currently. Does the rental income cover this? Hopefully so, but even if you have a good strong tenant/income in place leveraging this is not easy.

Some banks seem confused about what level of lease they need in place on completion and what information they need on the tenant; some even have started asking for business plans from the tenant if it's a new business- like that will be available every time….

Many commercial leases are lower grade covenants and wil not be supported by strong financials; in some cases this does not mean they are a bad risk- but lenders are nervous about higher default rates on let properties and at a time when falling demand/prices for those commercial units.

A major problem though is how to sensitise the risk without sensitising it to death and not lending- which in itself is causing values to drop as credit gets harder ( self fulfilling prophecy).

Underwriters are currently being exasperating- asking for things that sometimes are just unrealistic/intrusive/unlikely to make any difference to the decision.


August 2008 - Commercial First rumours

Whispers have floated by that say the long awaited return of Commercial First could be Q2 2009- in the current market that's a life time away. Speculation regarding just what their offering would be…


August 2008 - Barclays Commercial confirm business as usual

We have met with our Commercial and Business managers today and they confirm they have plenty of money to lend and keen to do deals; Comments by Investment banks in the recent press suggest they feel Barclays may need to raise further capital; at local levels we are told- as are the bank managers themselves that there is no lending cap and keen to write new business; this will be at higher margins but this is the same for all banks currently.

We did a cracking deal recently at c £2m very cheaply so we know they can deliver.


10th July 2008 - Base Commercial suspends all new lending

It will honour existing cases ( where offered) if drawn by 5th September. Unlike Commercial First and some other lenders it is offering time to draw existing cases- which is a small positive in yet another blow to commercial finance availability.

Base launched in a fanfare and fitted a great niche between prime lenders ( say Abbey) and non prime lenders- offering both prime and non prime options; The non prime options went early in 2008 and since then it has been much harder to find cases that fitted. The lender required 1 years accounts - which is fine but then if you have a client with 1 years accounts without any adverse then you could probably get cheaper terms elsewhere and Base were slightly hampered by a 180 day valuation. You never knew where this would come out  and what loan you could actually agree. Some brokers got around this by using one valuer who gave the same OMV/180 day value - until Base noticed a larger percentage of their book was being all valued by one valuer and the valuer was airbrushed out of their panel.

Whichever way you cut this- it’s another blow to commercial finance availability and another sign of the enormous stresses that lenders are working with.

The announcement confirmed the lender was searching for other lines of finance and hoped to return shortly. Let’s hope they do- Base had a good team and a reasonable product.


July 2008 - European Central Banks increase rates

Concerns that the European Central Bank will put up their interest rates this week - putting more pressure on teh sterling exchange rate and making some imports more expensive.


June 2008

Evidence Valuers still remain very cautious and only best quality properties seem to be coming in on expected values.


June 2008 - E1 completes on 90% LTV  

E1 completes on a 90% LTV owner occupier factory/offices unit - very good quality business and great pricing and loan to value. So good deals still available for the right borrower.


June 2008 - Base Rates

Base rate remains 5% but some concern that the Bank of England’s next rate change will be an increase to help choke off inflationary pressures.


May 2008 - Commercial First News

Commecial First sort out short term funding via Lloyds and this provides a working capital line for them; rumours in the market that they may have a product by the end of the year.


May 2008 - Base Rates

Base Rate remains 5%.


April 2008 - Small Firms Loans Guarantee Scheme

The Government announced that from the start of April the terms relating to eligibility have been relaxed and will make the scheme more attractive/available for potential borrowers.

The DTI seeks to increase utilisation of the scheme by 60% this year and this move will certainly help; The scheme used to be popular with lenders but fell out of favour as the terms became more onerous and paperwork became more detailed. As a result lenders didn't feel the income and time were worth the income generated. As a result we have seen much fewer applications under the scheme than historically.

The scheme works by providing security for applicants where no other security exists and may then mean the lender will agree to the loan. Conditions apply; for more details call E1 and ask for our underwriters.


10th April 2008

Base Rate reduced a quarter of a precent to 5.00%.


19th March 08 - Commercial First suspend all new loans

The big news this week remains the ‘ credit crunch’ and in particular the news announced late Tuesday evening that all existing pipeline and any new cases would not be progressed. The stance was advised as being temporary but we do not know if the lender will come back with a new funding line next week/next month or at all. Let’s hope they can raise new funding.

Clearly this is a big blow for commercial finance and brokers/packagers. Commercial First have set the standard for self certification commercial finance and were this week- the only lender at 85% ltv on self certification. This was clearly always going to be difficult to maintain given the lack of appetite from investors to buy the loans in due course but I think the market was hoping the lender could maintain its product offering- albeit at a reduced ltv. Why wouldn’t investors want a clean investment property with market rent more than enough to cover the loan with a margin? A case of throwing out the baby with the bath water - but the appetite clearly isn’t there for any level of self certification.

Base Commercial lending has withdrawn its self certification product leaving only really Interbay in this market but at much reduced ltvs and more selective property types.

Press comment this week on the residential market confirms that obtaining equity from properties will remain difficult and this will knock onto the commercial market.

Valuations remain variable- with some coming in well below expected valuation levels and some coming close- so finding the right lender at the right ltv is only part of the problem.

As I have outlined before I sense the bad news has some way to run yet. I think we need to see a little more leadership from the Bank of England- along the lines of the Fed in the USA- to help stave off further bad news. The run on HBOS yesterday is evidence of turmoil remaining and where rumour is as powerful as facts.

We remain happy to place cases for brokers who cannot currently send in to Commercial First. A period of re-adjustment on property prices is continuing and vendors will need to go along with this and applicants reduced ability to raise money or be left with decreasing assets that they don’t want.

The prime lenders generally haven’t been busier this year and will happily pick up the better quality cases.


March 08

Base rate on hold at 5.25%.


November 07

Magdalena Filipova joins the completions team from Newcastle University

October 07

New lender Islamic Bank of Great Britain is welcomed to our lender panel.

Fall out from USA Self Certification Mortgages spills onto non prime commercial mortgages with providers generally increasing rates and reducing LTV’s.

September 07

New lender Base Commercial is welcomed to our lender panel

Further enhancements made to E1 Online system including improved intelligent Dip system and easier navigation.

August  07

Master Packager status attained with 5D Commercial.

E1 complete a refurbishment of bottom floor to enable additional staff to be accommodated including its own Design Studio.

July 07

2000 introducers now registered with us

June 07

Hanna Christiansson joins the Completions Team

May 07

E1 showed at Money Marketing Live 07 at Olympia

E1 attend Mortgage Expo in Manchester with The Mortgage Times Group

April 07

E1‘s Intelligent DIP system completes intensive trials and is launched.

E1 achieves key partner status with Interbay Commercial (prior we were master packagers)