Over the past couple of years, it has felt like a bit of a rates (ahem) to the bottom in terms of how much debt will cost you. By reducing rates or by keeping them the same and increasing leverage beyond 70%, development finance lenders have been making debt progressively cheaper.<\/p>\n
But with inflation hitting record highs, is this about to change?<\/strong> The Bank of England (BoE) increased the base rate to 0.5% last month (doubling it from 0.25%), and logic dictates that this will increase the cost of borrowing. As such, you might expect the rates you’ll be paying on your senior debt to also increase.<\/p>\n However, we\u2019re seeing early anecdotal evidence that development finance lenders are sticking to their guns and not altering their products. The only lenders increasing their rates are the banks whose rates are tied to BoE rates and so have no choice in the matter. Our initial research indicates that these tend to be high street banks.<\/p>\n