Allica Bank slashes commercial mortgage rates

By Bridging Loan Directory 3rd May 2023

Allica Bank has announced a raft of record rate reductions across its commercial mortgage product range.

The significant rate cuts come in light of a stabilising economic picture and are targeted at encouraging businesses to invest and grow.

The business bank, which specifically focuses on serving established SMEs of between 10 and 250 employees, has reduced its interest rates by up to 1.20% on owner-occupied commercial mortgages and up to 0.90% on commercial investment mortgages, with a maximum value of £10 million.

It says this is the biggest reduction in rates in its history.

The bank also has an initiative that allows businesses to achieve a further discount of between 0.25% and 0.50%, depending on loan size, EPC rating or Debt Service Cover.

The changes, with the additional discounts available, mean rates can start from:

Owner-occupied semi-commercial – 2.00% +Base Rate (variable) and 5.85% (fixed)
Fully commercial owner-occupied – 2.90% +Base Rate (variable) and 6.75% (fixed)
Semi-commercial investment – 2.25% +Base Rate (variable) and 6.20% (fixed)
Fully commercial investment – 3.60% +Base Rate (variable) and 7.35% (fixed)
Care Homes – 3.00% +Base Rate (variable)
Interest-only, owner-occupied (RLS) – 7.75% (fixed)

The news follows Allica’s recent reductions to its stress-testing and Debt Service Cover requirements across all commercial mortgage products.

The bank also doubled its maximum commercial mortgage loan size from £5 million to £10 million earlier this year.

Nick Baker, Chief Commercial Officer at Allica Bank, says such moves after a period of consecutive Base Rate increases will be critical to accelerating growth:

“UK businesses have been through a period of sustained uncertainty and increasing costs, but many now see an opportunity to grow and need our support on their journey.

We believe that banks like ours have a responsibility to help established firms capitalise on a stabilising environment to the benefit of their long-term growth.

That is why we’re reducing the rates on variable-rate owner-occupied commercial mortgages by as much as 1.20% to help support as many businesses as possible.

Whether it’s investment in a new premises or existing property, we are dedicated to supporting UK businesses with even more competitive terms and an award-winning relationship-based service.”