The most positive aspect of the recent rate rise by the Bank of England is that it was not a surprise. It was rather the case that the November 2 bank rate rise from 0.25% to 0.5% was widely expected. Now that it has happened as anticipated it’s important to manage your financial affairs with it.
Here at Stewart Hindley we have given this interest rate rise our priority attention. In terms of our status as the leading name for hospitality lending it is vital that we understand all possible implications for the sector. In this article we are going to look at two key areas – how existing loans are affected and how new hospitality lending agreements might be impacted.
Existing Hospitality Loans
There is no getting away from it – the increased rate will mean an increase in the amount paid in service of debts. The extent of the increase is, however, not fixed. How much extra will need to be paid – and when – depends on two factors. These are the nature of your existing loan and what decision your lender has made about the increase.
In respect of the latter, the implementation of the change is not a constant. Different financial institutions will introduce the rate change in accordance with their own strategy. For guidance in this we must refer you to your lender. If they have not communicated a change with you yet then it would be a proactive move to contact them directly. It would be to your benefit to initiate discussions around any proposed changes.
This contact also relates to the first factor. Several of Stewart Hindley clients are on fixed term, fixed rate lending agreements. These will have been negotiated with possible interest rate changes in mind, but due to the fixed nature will not be directly affected. Should your fixed term loan be close to a termination and renewal point then now would be an ideal time to start initial negotiations in regards of the new terms.
New Hospitality Loans
A widely held view is that increased interest rates are met with a decrease in capital available for business loans. We do not believe this to be the case in the current situation – certainly not in respect of hospitality lending.
There are a number of reasons for the Bank of England rate increase decision. Many of them relate directly to ensuring that the business environment remains buoyant and stimulated. At this time the UK leisure and accommodation sector is viewed as being particularly healthy. With this being the case we believe there will be no adverse effect on hospitality lending due to the bank rate change.
If you are seeking assistance and advice in respect of a new hospitality loan please do not let the rate change put you off. Now is the time to contact us here at Stewart Hindley about your plans. Our Brokers can help you secure the best terms possible for your financing requirements.
As you can see the decision by the Bank of England was widely anticipated and absorbed into the hospitality lending market. We understand that the natural reaction to such an increase is caution and concern. At this stage, however, we do not view this change as negative. With the intention of the increase being to give a boost to the British economy the impact on the accommodation and leisure section is in all likelihood going to be positive.
The team at Stewart Hindley are committed to giving you the very best service available for all hospitality lending requirements. We have a proven track record of success, enabling many businesses to flourish in the UK leisure and accommodation sector. It would be our pleasure to provide this service for you.
For more information, or to set up an appointment, please call us on 01488 393042.