MORE than ever before we need the political squabbling to end.
At this point in history, it’s in the best interests of every lender if the enduring economic uncertainty is resolved.
As soon as either Rishi Sunak or Liz Truss is elected, they must act decisively and promptly to avert both the real threat of stagflation as well as the impending recession.
It’s impossible to underestimate the importance for the new Prime Minister, in conjunction with their top team, to stop inflation in its tracks thereby preventing further interest rate rises.
What’s more, this individual must – when they’re finally given the key to 10 Downing Street on Monday, September 5 – also tackle the cost of living crisis head-on.
Is this possible? Let’s resolutely hope so.
I know from speaking to lenders daily that they want to lend to the best quality borrowers which mitigates the likelihood of them having to foreclose.
But many indicators are now present that suggest that the economy will get worse for those same borrowers before it gets better.
For a start, the Organisation for Economic Co-operation and Development (OECD) now predicts that growth in the UK will be the worst in the G20 in 2023 – with the notable exception of Russia.
As the Bank of England states in its Financial Stability Report for July 2022: “Risks for borrowers with higher levels of debt will be greater if prices increase faster than expected, growth is weaker than expected or it becomes harder to borrow.”
This comment builds upon the Bank of England’s previous prediction in May that there could be a recession later this year.
The power struggle that’s still unfolding in Westminster must not distract from the gravity of the economic situation we’re encountering and all political efforts to resolve it must redouble.
My reason for stating this is simple…
Given the pervading economic uncertainty that now exists, it’s inevitable that defaults will increase.
At this point in time, lenders should be more concerned than ever about underperforming or default loans, especially those where the term has expired and they want to allocate those funds to new deals.
They should also be mindful about the speed with which those default loans can be recovered.
Ever since the pandemic commenced, CG&Co has sought to provide our clients with a competitive advantage at every opportunity.
Put simply, we’ve consistently achieved outstanding results on their behalf by engaging with borrowers as early as possible in the most appropriate way.
And we’ve no intention of deviating from this approach in coming weeks and months regardless of what evolves economically and whether Sunak or Truss becomes Prime Minister.
With the backlog of possession claims increasing, lenders now owe it to themselves – more than ever before – to work with the most proactive property receivers to ensure that they can relend at rates that are most beneficial to themselves.
The new Prime Minister must end the economic uncertainty that is preventing all businesses – and the specialist finance industry, in particular – plan for the future.
But until that time arrives, lenders resolutely need the most proactive property receivers working on their behalf to achieve the best possible outcome.