Balancing out changing base rates
Facility options aside, I think the main thing on all our minds currently is the ever-changing base rate, however, we hope we are going in the right direction with the BOE’s recent decision to hold fast.
From the chart below, you can see just how changeable interest rates have been over the past 80 plus years.
For a comprehensive look at the rise and fall of the UK’s housing market (stretching all the way back to 1975) read our blog – Housing Booms & Busts here.
Post the 2007-2008 financial crash, interest rates were consistently low for over a decade – climbing to their highest point of 0.75% in 2018. This period of relative consistency meant the sudden jump in interest rates at the start of 2022 was all the more jarring.
Particularly if you’re midway through your facility and the interest charges suddenly climb. This can also have a knock-on effect on drawdowns.
For example, in the variable rate scenario, if the facility interest climbs, your gross agreed facility does not – meaning there will be more of that facility dedicated to interest instead of your NET drawdown. Therefore, you could be left short and end up having to pick up the shortfall.
So now we know how risk can affect interest rates, you may be thinking that a fixed facility or committed facility will always be more expensive? Not necessarily.
Bringing certainty to a changing market
As the development finance arm of our LandTech ecosystem, our job is to understand the lending market and know who is offering what and at what price point.
Through LandFund, we can introduce you to a wide variety of lenders who can offer you fixed rates and committed facilities without a giant premium. With some lenders (and under certain circumstances) there can be no premium at all – giving you added certainty and the right deal for your project.
We’re also passionate about transparency, particularly when we’re in this period of fluctuation.
That’s why we’re proud to say that we can achieve highly competitive rates from 7.25% fixed on funding for your project at 65% LTGDV.* Plus, there’s also the opportunity to get a free LandTech license when you work with us to secure development funding.
Get in touch today to discuss how we can offer you peace of mind in an ever-changing landscape.
*Correct at time of publication – rates may vary.