Funding Circle cuts rates for best-quality borrowers
Funding Circle has lowered its rates for its highest-quality business borrowers by an average of one per cent.
The former peer-to-peer lender announced the change yesterday, alongside an update on general market conditions, which revealed greater-than-expected stabilisation in external markets.
The lower rate was applied to new loan applications from 14 February. The announcement warned brokers: “Please be aware that re-applying any deals already in flight may lead to an extra credit search which could affect your client’s credit rating.”
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Additionally, Funding Circle said it has reintroduced D risk bands for borrowers in certain segments, as it continues to monitor in detail the credit performance of its portfolio.
It also said that it has tailored its approach to larger businesses, “to gain a more detailed picture of their situation, which will allow us to say yes more often”.
Funding Circle said that the changes were a reaction to macreconomic conditions. It highlighted that while inflation remains high, the International Monetary Fund (IMF) has upgraded its forecast for global GDP growth by 0.5 per cent, on the back of the Chinese economy opening up and falling energy prices in Europe.
However, the IMF also expects the UK to be the only leading economy to shrink in 2023. UK GDP is forecast to be 0.5 per cent smaller in the fourth quarter of the year than in the same period of 2022, and Bank of England surveys suggest that business investment is likely to fall this year.
Interest rates such as government bond yields and interest rate swaps have fallen, as financial investors now expect the Bank of England not to raise interest rates as much as previously thought.
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“Given the current uncertainty, we continue to watch developments closely and will keep you updated as we look to improve our proposition for you and your clients”, the update concluded.
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