Interest Rate Market Update: What You Need to Know
For many years, the Bank of England base rate has been extremely low, providing a favourable environment for businesses to access loans at affordable rates. However, over the past few months, we have seen this rate steadily increase as the BoE seeks to regain control of inflation. Many dental practice owners are understandably concerned about how rising interest rates will affect their business.
It’s wise to pay attention to interest rates and understand how they impact the funding landscape of your dental practice. In this blog post, we'll cover our observations on the current market conditions and what you can do to stay on top of your practice finances.
• While we anticipate that the base rate will continue to rise over the coming months, we have observed that banks' appetite to lend remains strong with no changes to their rates. This is good news for dental practices looking to secure financing, as it means that they are still able to affordably access the funding they need.
• The majority of dental practices are profitable enough to meet debt serviceability calculations on a stress-tested basis and therefore remain a highly desirable investment for banks. The dental sector is not experiencing the same level of impact from rising interest rates as other sectors, and loans are still affordable.
• Many practice owners still have high interest rate loans and could be missing out on better rates and terms by not actively comparing their options. Deals can be time-sensitive, so it’s imperative to stay on top of finances and explore the availability of deals with lower rates to ensure you're not unnecessarily overpaying for your practice funding.
• The base rate is forecast to increase to 6% by the end of next year. Banks are already stress testing at the higher levels to ensure that loans are affordable for borrowers.
• The rise in private dentistry with practices choosing to opt out of state funding is also driving demand for business funding, as practices look to invest in new equipment and facilities. It’s a buoyant market that looks set to continue growing and attracting more investors.
For dental practice owners nearing the end of current loan terms, now is a critical time to explore financing options, secure the best possible refinancing deals, and avoid paying more than necessary.
If you’re concerned about your business cash flow, speaking to a specialist broker can help you find the best funding solution for your practice. Whether you're looking for a new loan or looking to refinance your current debt, it's important to do your research and accurately assess the financials to make sure you're getting the best deal and one that is most suited to your current needs. Our team has extensive experience working with the dental industry and can help you navigate this complex market with ease. Get in touch today to learn more about our services and how we can assess the financials for you.