Back on to one of my hobby Horses. A respected Wrexham businessman, with at least 3 successful companies, was telling me how an adjoining property had become available for sale. To buy it he would need a short term loan so he contacted his bank, and a couple, of others to see if money was available and at what interest rate.
None of the banks were keen to lend but eventually his own bank did make an offer. Now we all know that the Bank Rate is 0.5%, we know this very well if we are looking to obtain a return on deposited money, so what was Pauls best offer? It is 11.9%.
Now we expect the banks to have a profit margin, even if it is to a great extent our money that they are reluctant to lend, but a differential of 11.4%!
During the course of my morning I spoke to a valued client who is trying to move house. In simple terms he can put down a deposit of over 60% on the new property so it must be a doddle to finance the balance. Wrong again, the possible lenders want him to provide up to date business records and are inferring that "some security", debenture?, might be needed. This is from the geniuses who were offering 110% mortgages only 18 months or so ago. Obviously this is delaying the sale/purchase process and my friend may lose the opportunity to buy the new house. If this is happening to a man with a good finance record and a successful business, what chance have the majority of prospective house buyers got?
Time to get off the hobbyhorse, but the reality is so different from what Gordon Brown and his government are telling us.