Mortgage analysts warn of further hardship for SMEs

SMEs in the Midlands are facing further financial hardship due to high street banks raising their business borrowing rates and cutting lending terms, mortgage analysts have said.

Walsall-based independent mortgage and bridging provider Crystal Mortgages said whereby commercial mortgage departments were lending on average 3.25% over the Bank of England Base Rate (BBR) with repayments spread over a maximum of 25 years, these products were being withdrawn with mean lending rising up to 5% over BBR over a typical period of 15 years.

The company said the move would affordability calculations incredibly high for the typical SME. However, it said the picture was compounded because of the tough lending criteria being implemented by the banks.

Roger Dewsbery, senior underwriter at Crystal Mortgages, said: “The Government’s increasingly tough demands on capital adequacy are again adversely affecting the business sector that will reinvigorate the UK economy, SMEs.

“In a nutshell the banks are having to force up the cost of lending as they are not profiteering from the reserves they are holding onto, and business is again bearing the brunt, putting the borrower in a worse position.  This is, of course, if the money is lent in the first place.

“Because of the move we are starting to see even more viable competition from the non-conforming market, and the best deals are available from firms who will individually assess each case and the source the best deal from the market or direct funding streams.”