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August 8, 2019

Over a third of asset finance brokers expect lender pricing to increase

According to research by United Trust Bank, over a third of asset finance brokers expect lender pricing to increase in the next 12 months.

By Christopher Marchant

According to research by United Trust Bank, over a third of asset finance brokers expect lender pricing to increase in the next 12 months.

Of the 114 asset finance brokers surveyed, 14.5% responding to the Broker Sentiment Poll believe that pricing in the asset finance sector is unsustainable and 37% expect to see lender pricing increase by this time next year.

However, 71% believe that current lender pricing is about right with a further 14.5% suggesting pricing is too high.

Keith Sangwin, head of sales for asset finance at United Trust Bank, said: “Competition in the asset finance sector is fierce with pricing down to pre-credit crunch levels. It is apparent there’s still a need for volume but as Brexit draws near, now under Boris Johnson’s leadership, the impact of a potential ‘no deal’ Brexit may place us in uncharted waters.

“The Organisation for Economic Cooperation and Development (OECD) predicts that the UK economy will grow by less than 1% in 2019 and 2020 if Brexit goes smoothly but may sink into recession in a ‘no deal’ scenario. Although 71% of brokers feel that current pricing is about right, funders may feel the need to review their strategies this side of the 31st October, especially if it looks like a no deal outcome is most likely. Anecdotally, there are rumblings from some quarters that defaults are already increasing, perhaps foreshadowing worse to come if SMEs don’t get more certainty soon.”

When asked as to which channels they were experiencing the most competition, in order of rank brokers responded: high street banks, other brokers, specialist lenders, businesses self-sourcing finance, and vendor/sales.

In May, the Broker Sentiment Poll from UTB revealed that four out of five brokers (81%) are pursuing their plans for their businesses regardless of what happens with Brexit.

However, 9% are putting plans on hold until the nature of Brexit is much clearer and a further 8% are pursuing a more conservative plan due to Brexit uncertainty. Just 2% are implementing more aggressive growth plans.

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