News/Press

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%)

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 Moneyfacts.co.uk 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)