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Lease Team

Brokers unmoved by base rate, says UTB



 Base Rate increases have had no impact on business, say over two thirds of brokers. Nearly half expect the Base Rate to be 1.0pct by the end of 2019.

 More than two thirds (68pct) of brokers responding to United Trust Bank’s most recent broker sentiment survey believe that the two Bank of England Base Rate increases seen since November 2017 have had no impact on their business.

 The Base Rate currently stands at 0.75pct following an increase from 0.50pct on the 2nd of August this year.  The rate was increased from 0.25pct to 0.50pct on 2 November 2017.

 UTB’s survey, carried out amongst over one hundred brokers operating in the asset finance and property sectors, also found that 16pct of brokers felt the two increases had had a positive impact on their businesses as opposed to 16pct who felt they had had a negative impact.

 The survey also asked brokers to predict what the Base Rate would be at the end of 2019. Nearly half (46pct) expected one more increase of 0.25pct between now and the end of 2019 taking the Base Rate to 1.0pct. 12pct expected the rate to fall.

When asked where he expected the Base Rate to be at the end of 2019, Harley Kagan, Group Managing Director at United Trust Bank, commented, “It is encouraging to see that for a majority of brokers the two Base Rate increases have had little to no impact on their businesses over the last 12 months. I believe the same is broadly true from a lender perspective … However, a return to the interest rates seen before the credit crunch seems unlikely. Whilst a 5pct Base Rate appeared reasonable in 2008, the PRA recently challenged the resilience of banks and other lenders using a 4pct Base Rate for stress testing, an indication perhaps of what they believe would be an extraordinary interest rate for the current economic environment.”

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