14:25 PM, 27th October 2010, About 12 years ago
Property investors and small businesses are finding problems borrowing as banks and finance institutions have slashed lending by about £13 billion.
The latest annual lending survey by the National Association of Commercial Finance Brokers (NACFB) shows about £20 billion a year was available for businesses to borrow in the mid-2000s and this has slipped by around 66% to the current £7 billion a year.
The number of lenders has halved as well in the same period.
“If you look at late 2007, early 2008, our members probably had over 100 lenders to choose from for commercial finance. That now is below 50,” said Adam Tyler, the NACFB’s chief executive, on BBC Radio 5 live’s Wake Up To Money.
“It’s become increasingly difficult to actually place business, whether it’s with the high street lenders or with smaller companies.”
The fall in lending has affected the buy to let market with 24,900 buy-to-let mortgages worth £2.4 billion were taken out between April and June 2010 – which is 25% of the level of three years ago, according to the Council of Mortgage Lenders.
At the end of June, there were 1.26 million buy-to-let mortgages outstanding, worth a total of £149 billion, accounting for 12% of all mortgages, the highest proportion since records began.
A separate report from the Institute of Chartered Accountants in England and Wales (ICAEW) says many businesses cannot borrow because lending criteria are too narrow. The ICAEW also found another factor affecting the drop in lending is many businesses are concentrating on paying back outstanding debts rather than looking to take on new ones.
The banks recently wrote to the Chancellor George Osborne to let him know that they were setting up a task force to examine ways to increase lending.
“The objective of the task force is to examine problems affecting the securitisation markets, to discuss what can be done from a UK banking perspective to create a stronger and more sustainable market for business finance, and to explore other issues that will influence the ability of businesses to obtain the finance they need,” said the letter from Stephen Green, chairman of the British Bankers’ Association.
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