Tom Renwick, Atom Bank’s head of business banking, is anticipating a rebound in SME lending next year as the appetite to borrow is buoyed by lower interest rates, allowing businesses to expand and invest.
Challenger banks, said Renwick (pictured), are poised to deliver a large share of this SME lending, having outperformed the big five banks for the past three years.
Renwick added that while this year has been challenging, there are reasons to be optimistic for the outlook for the commercial real estate market next year and beyond.
He said: “While there is optimism for improvements in commercial real estate, we should expect to see notable variances in the recovery between different sectors.
“Tourism has performed incredibly well in London this year, and with the expectation of higher levels of inbound overnight stays, investors may be keener than usual to back hotels.
“Meanwhile, the rise of remote and flexible work arrangements will have an impact on the office market, though we are seeing suggestions of rental growth in this segment off the back of a shortage of quality office space and a potential increase in office-based employment.”
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Lenders need flexible attitude around new-build LTVs
Meanwhile, Richard Harrison, head of mortgages, is calling for lenders to embrace the new-build market and be more flexible around loan to values (LTVs) following the government’s Budget announcements focusing on housebuilding.
He said: “The rate of house price growth, hikes in rental costs and the removal of schemes like Help to Buy [have] made it harder for aspiring homeowners, but first-time buyers need to be able to access the housing ladder. While the government needs to come good on its promise to build, the onus is also on lenders to be innovative in how we provide the support they need.”
Harrison said that the cost-of-living challenges of recent years has meant that more borrowers now fall into the near prime category, having had a minor credit blip.
Analysis last year from the Financial Conduct Authority (FCA) found that around six million Brits had missed a payment, but if those issues were temporary, then they may now be looking to access mortgage finance.
He continued: “Given the number of would-be borrowers involved, as an industry we need to see more lenders supporting these customers not only with their needs today, but also helping them regain prime status should they show improvement.”
