Bank lending

[jackrussell101]

Just wonder if there are many on here involved in the banking sector that can shed any light on whether these interest rates have knackered new bank lending?

I would imagine the figures on many new investments wouldn't stack up now in the current environment if you're having to borrow the money... which would be most people and businesses...

 

[Farmer Roy]

People have short memories

in the mid 80’s we were paying over 20% for business loans

anything under 10% is cheap I reckon

 

[jackrussell101]

People have short memories

in the mid 80’s we were paying over 20% for business loans

anything under 10% is cheap I reckon

That's not the answer to the question

 

[Nearly]

Farms making 2% return on working capital will struggle to justify major investment.
Other businesses with higher margins won't hold back yet.
It's maths.

 

[Farmer Roy]

I have to say, if an enterprise doesn’t stack up due to a % or 2 rise in interest rates, it was probably on pretty dodgy ground anyway.

 

[Sid]

Just wonder if there are many on here involved in the banking sector that can shed any light on whether these interest rates have knackered new bank lending?

I would imagine the figures on many new investments wouldn't stack up now in the current environment if you're having to borrow the money... which would be most people and businesses...

Savers are loving the fact their interest rates have gone up to 5% with inflation at 8% they still don't realise wtf is going on!

 

[jackrussell101]

I have to say, if an enterprise doesn’t stack up due to a % or 2 rise in interest rates, it was probably on pretty dodgy ground anyway.

Which is where the vast majority of UK agriculture finds itself, or less for that matter

 

[DaveGrohl]

Just wonder if there are many on here involved in the banking sector that can shed any light on whether these interest rates have knackered new bank lending?

I would imagine the figures on many new investments wouldn't stack up now in the current environment if you're having to borrow the money... which would be most people and businesses...

That’s the idea of higher interest rates isn’t it? To dampen things down, to throw a wet cloth over the chip pan fire. Might’ve been an idea to turn the gas down before the pan set alight though…. But hey ho, central bankers innit.

 

[DrWazzock]

But when savings rates are less than inflation and terms are punitive such having no access to your own cash for year, where’s the incentive to save?
If anything there’s less incentive to save now than there ever has been so how will the so called “high” interest rates curb inflation? Only by bankrupting over exposed businesses and putting folk out of work I’d say. What a plan!

 

[DrWazzock]

I don’t think a bank would ever lend us money as our business tends to defy gravity. Hopelessly inefficient, small and over staffed. Been like that for 40 years.

 

[DaveGrohl]

But when savings rates are less than inflation and terms are punitive such having no access to your own cash for year, where’s the incentive to save?
If anything there’s less incentive to save now than there ever has been so how will the so called “high” interest rates curb inflation? Only by bankrupting over exposed businesses and putting folk out of work I’d say. What a plan!

So the answer is to keep rates low and stoke the inflation until we’re Zimbabwe? Or the Weimar Republic? These zombie companies need cleansing precisely so that capital can be allocated properly. That’s just life I’m afraid. Far too many zombie companies were kept on life support after 2007/2008 worldwide, it was always gonna catch up eventually.

 

[DaveGrohl]

I don’t think a bank would ever lend us money as our business tends to defy gravity. Hopelessly inefficient, small and over staffed. Been like that for 40 years.

And yet you’re still in business. You don’t sound like a zombie company.

 

[Billboy1]

they call it the stress test on new lending probably around 10% now ?

 

[DrWazzock]

So the answer is to keep rates low and stoke the inflation until we’re Zimbabwe? Or the Weimar Republic? These zombie companies need cleansing precisely so that capital can be allocated properly. That’s just life I’m afraid. Far too many zombie companies were kept on life support after 2007/2008 worldwide, it was always gonna catch up eventually.

Well yes sadly that’s the only way out now. Cull the zombie companies, devalue the housing market. But who decided to lend them the money in the first place and why aren’t they being held accountable? A lending decision isn’t just about the rate, it’s about whether it’s a viable proposition. I remember a bank manager locally being sacked when a local farm defaulted on its debt. The bank also sold the managers house to help recover the debt as they considered him negligent. Lenders responsibility was taken much more seriously in those days.

 

[Farmer Roy]

Any borrower who doesn’t factor in potential rate rises is an idiot

 

[Farmer Roy]

Many borrowers tend to lie not only to the bank, but to themselves as well . . .

 

[DrWazzock]

And yet you’re still in business. You don’t sound like a zombie company.

We are still a functioning business making a small profit. If we haven’t got it we don’t spend it .

 

[Still Farming]

Their'll lend to you whatever interest rates are,as long as your a safe bet, means to pay back and all signed up assets if you don't.

 

[BrianV]

That’s the idea of higher interest rates isn’t it? To dampen things down, to throw a wet cloth over the chip pan fire. Might’ve been an idea to turn the gas down before the pan set alight though…. But hey ho, central bankers innit.

Alright in theory except this inflation is not caused by increased consumer spending but by increased costs to business that have to be passed on to stop businesses going under, high interest rates will simply cause more companies to fold without bringing down the cost of production. When energy prices start to rise again (as they will) this will simply compound the problem with the government & Bank of England making things worse not better.

 

[Lothian]

The bank aren't helping themselves with greedy margins either though. 3+% seems to be the norm now. Makes a 5% loan that much harder to pay off.

No idea what this is doing to HP interest as well as they will probably be in the mid teens now.

I certainly can't think of anything agriculture related I would want to take a big loan for at the moment anyway.