Market Trends and Confidence
Typically January in the brokering world is a little quieter however that doesn’t seem the consensus for 2024. We’ve seen a lot of lenders starting to lower rates on term products and certain development finance has become a little more competitive with rates in the region of 9%PA for 65% LTGDV.
For the development finance at 75% LTGDV/90% LTC there hasn’t been any movement and our funds are still working with 10.5%pa. News which could assist with unlocking more sites came from Savills who note ‘in last quarter of 2023, residential development land values fell further on a national level, with fewer sites sold and less bids received on sites marketed’.
Good news for developers if sellers and agents take note and price sites correctly.
Henray Capital’s Diverse Month
Henray Capital has looked at a number of new deals with a firm focus being on BTL and development exit. It seems many of the clients kept the term of a development loan / refurbishment loan to see if rates would come down and in some way it has paid off marginally.
We are currently looking at two large BTR schemes in Derby. Upon further research it’s clear the local authority is pumping a lot into the regeneration in this area. What else was surprising for us was the yield on the schemes which are making both propositions of interest to our BTR funds. It’s early days for both these projects with funding expected to complete in late spring a perfect time to break ground.
One client introduced to Henray Capital was at their limit with their usual funder and as such needed guidance on how to begin a new relationship with a lender who was flexible in their approach to personal guarantees due to corporate structure. We worked with a 10% corporate guarantee limited to one other long trading SPV within the group which will make the legal process swifter and cheaper but also allows for further growth with the lender for the borrower. We were clear that it can be a laborious process beginning new relationships however once completed this particular lender is very easy to deal with and commercially minded to aid with funding.
Aside from new deals we had two borrowers complete their final credit calls and completions set for early February. One, a large MUFB being secured on a 5 year fixed product. The other a development exit bridge at a low LTV where Henray Capital was able to negotiate a very favourable rate whilst the client finished the scheme and sells the units.
Henray Capital’s Other Focuses
January has also been a month where we have focused on building relationships with new funders and we are keen to look at how we can work together to ensure our borrowers get the best possible funding options as well as outstanding service. It seems the funding market is definitely becoming more competitive and that can only be a good thing for those looking to borrow.