What impact have the rising interest rates had on your lending?

At Blackfinch, we offer short-term bridging and development lending with 
interest rates that are not directly linked to the Bank of England base rate. As a 
consequence, we saw a record number of enquiries for loans with borrowers, 
developers and brokers in 2023. 

As the cost of capital for many other lenders has increased, due to the need to pay 
interest on investor’s deposits, this has made our lending relatively cheaper. Also, 
while most lenders link their lending rates to the Bank of England’s base rate, we 
choose not to, as it gives the property developers we lend to greater certainty of 
their finance costs. 

We see this as an essential part of the service we offer. At a time of considerable 
uncertainty from build-cost inflation and valuations, we do not wish to add any 
further unpredictability for our borrowers. In addition, the higher rates now 
being offered in the lending market mean that previously lower-interest areas of 
property lending have now become viable for us. 

For example, buy-to-let portfolio lending and term loans (commercial mortgages) 
are income backed and therefore lower risk. 
The increased deal flow has sent a lot of high quality and low risk borrowers to 
us. We have also reduced our highest rates of loan-to-value (LTV), and we expect 
that offering lower LTVs to potential borrowers is a more prudent approach in the 
current climate. 

Blackfinch Property also lends across both residential and commercial real 
estate, and within those areas across a multitude of asset classes. As a result of 
this diversification, we believe we are well placed to manage the varying impacts 
without any concentration risk within the portfolio.