Over a third of asset finance brokers expect lender pricing to increase in the next 12 months

09-Aug-2019

14.5% of asset finance brokers responding to United Trust Bank’s most recent Broker Sentiment Poll believe that pricing in the asset finance sector is unsustainable and 37% expect to see lender pricing increase within the next 12 months.

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

Thinking about pricing in the asset finance market, with which of the following statements would you agree?

Current lender pricing is about right

71%

Current lender pricing is unsustainable

14.5%

Current lender pricing is too high

14.5%

And thinking about the next 12 months…

I expect lender pricing to stay about the same over the next 12 months

43%

I expect to see lender pricing increase over the next 12 months

37%

I expect to see lender pricing decrease over the next 12 months

20%

In a further question, brokers were asked to select from which channel they felt they were experiencing the most competition. Top of the list was ‘Direct from High Street banks’ followed by ‘Other brokers’ in second place. The poll also revealed that brokers are competing against businesses self-sourcing finance more so than Vendor/Sales.

From which channels would you say are you experiencing the most competition?

Direct – High Street banks

1

Other brokers

2

Direct – Specialist lenders

3

Businesses self-sourcing finance

4

Vendor/Sales

5

Keith Sangwin, head of sales – Asset Finance, commented:

“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.

“At UTB our strategy will remain consistent. We continue to approve deals to sensible credits at competitive rates, price matching other funders when appropriate. And for occasions when quick, creative underwriting and a speedy completion is required, brokers know the UTB service is very hard to beat.”