Improvement in commercial lending to continue into 2015

This will be my last blog before Christmas and it is traditional at this time of year to review the year about to end and to also look forward at the year to come.

From a personal perspective it feels like the improvement in the commercial lending market has continued and from the feedback I have been getting from commercial lenders over the last few weeks I can only see this trend continuing. The traditional high street lenders will continue to write the bulk of commercial business, but they are being pushed across a number of sectors by the newer lenders in the market. The challenger banks Aldermore, Interbay and Shawbrook are going from strength to strength and I am sure that they will continue to grow their loan books and keep the high street lenders on their toes. I also had a very good meeting with Metro Bank this week and they have come to the UK market and have re-set expectations of what a bank is and how it offers its services. So far this has been more in the retail channel, but I am being told that they have some big growth targets for their commercial loan book in 2015 and they will be a welcome addition to the suite of products available to brokers and clients alike.

The other interesting growth area is the unsecured business loan sector. It seems to be a reflection of funders looking for a sector that can provide a premium return on their capital and it certainly fills an interesting niche. For businesses that need funds quickly to secure a profitable opportunity it is an alternative to a traditional overdraft and, unlike similar products that are aimed at personal borrowers, this market should be more sustainable as the funds are generally being borrowed to create income. Currently, the interest rates can be relatively high, but I would expect the competition between the lenders to drive down pricing as has happened in the bridging market over the last couple of years.

What else has been a recurring theme in 2014 and is likely to continue into next year? Well, interest rates and the timing of the next rise in the base rate has been a topic of great debate and the ‘fix or not to fix’ question has taxed many clients’ minds over the last year and their deliberations haven’t really been helped by the mixed messages coming from the Bank of England and the markets in general. We all know that the next move will be up, but that issue of timing is going to be lots more fun I am sure in 2015.

Finally, it has been a major talking point and contentious issue in 2014 and as the saying goes ‘this one will run and run’. I am talking of course about the FCA and the new regulatory regime for commercial lending. This has already caused a great deal of lively debate to say the least and I can see no change for 2015.