A look back on the lending environment
In the Bank of England January 2014 Trends in Lending report some interesting changes are outlined. In the report, the Bank of England looked at major UK lenders including Banco Santander, HSBC, Lloyd’s Banking Group, Nationwide and RBS – they make up 75% of the stock of mortgage lending, and 55% of the stock of consumer credit at the end of June 2013. The report also looks at the wider lending community. At Trade Finance Global, we break this report down into how this report affects small businesses, regarding accessing finance such as stock finance and trade finance.
The cost of borrowing decreased
The report made clear that lending rates of debt lending (swap rates) were didn’t change much in the fourth quarter of 2013. However, increasing competition between lenders was leading to some reduction in the cost of corporate credit and quoted rates on mortgages fell slightly over the same quarter. Also, was greater confidence of companies and approvals for business credit alongside demand from individuals in relation to secured lending on house purchases. For businesses, this meant that the cost of borrowing actually decreased over the quarter. In addition, the total amount of money lent to SMEs and large organisations actually increased by around 10% in the same quarter.
More companies used finance facilities
Facilities such as trade finance or revolving credit facilities also increased in comparison to 2012. Businesses normally access these finance facilities to refinance their debt. The annual rate of growth in the stock of lending has grown in 2013 and we hope this trend continues.
The rate of corporate distress situations (insolvency, liquidations) remained steady over the two years, which is a positive sign when coupled with the increase in lending.
More commercial mortgages were approved
Commercial mortgage approvals saw great growth as the monthly average in 2013 to November was up 19% compared to the same period in 2012. The number of approvals for re-mortgaging increased on average by 15%. It was expected by the Council of Mortgage Lenders that gross secured lending by all UK resident mortgage lenders in 2014 to be around 15% higher than anticipated in 2013.
What this means for your business
At Trade Finance Global, we help UK businesses access finance to grow and trade internationally. According to the report, the bigger banks are lending more at competitive rates, which is great for a growing economy. To find out more about trade and stock finance, get in touch with our experts now. Or, learn more about the different types of finance here.