A rise in the Bank of England Base Rate could severely impact the commercial lending sector, it has been claimed.
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With many industry commentators pointing to a further rise in the Base Rate before the end of the year, Keith Howard, chief executive officer at 5D Finance, admitted some of those active in the commercial sector would be squeezed out if there was another rate rise.
He said: “Base Rate increases could hinder the market, but the bigger the organisation, the less exposed they are likely to be. The commercial sector deals with businesses and the large organisations are likely to have very little exposure to any real rate increases. However, smaller businesses could be hit hard, as they are exposed to potential rate rises.”
Hugh Nichols, partner at Badbury Berkeley Financial Services, agreed that any Base Rate rise could damage the growing commercial sector.
He said: “Historically over the past 20 years, the commercial market has been the steadiest. Any Base Rate rise will definitely impact on the smaller investors and commercial property owners.
Home owners sometimes have more of a cushion because they are on fixed rate deals, whereas those in the commercial sector are often variable or tracker. No one in the mortgage market is completely protected though.”
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