Allica Bank slashes commercial mortgage rates to challenge high street and introduces energy efficiency incentive

- New reduced rates designed to put Allica’s commercial mortgage products on equal footing with high street banks as it looks to increase pressure on traditional lending market.

- Additional rate reductions available for mortgages on properties with an A-C EPC rating as bank boosts support for SMEs trying to lower their carbon footprint.

Allica Bank says it is looking to take on the high-street banks on rate as well as service, as it significantly reduces the rates on its commercial mortgages. The bank – which has seen strong demand in the first half of 2022 and is predicting £1 billion of committed loan offers to established SMEs this year – said it has revamped its offering in line with feedback from brokers it received in its broker survey.

It will also be looking to support the UK business community’s efforts to become more sustainable, with further discounted rates for mortgages on properties with an A-C EPC rating. The wide-ranging enhancements include:

• Extending its limited edition prime owner-occupied product and further enhancing the terms for commercial owner-occupiers. It will now offer margins of 3.50% over Base Rate where borrowers can demonstrate 2x repayment cover up to 60% loan-to-value, and 3.65% over Base Rate up to 70% loan-to-value.
• Introducing a new limited edition prime commercial and semi-commercial investment offering, which sees margins over base rate as low as 3.50%.
• For properties with an EPC rating of A-C, rates will be reduced by a further 0.25% in support for businesses looking to reduce their carbon footprint.
• Reducing rates for standard mortgages of more than £750,000 by 0.25%.
• Removing the limit against Vacant Possession Value for experienced care home operators, and reducing interest margins on care home deals.

This follows Allica recently increasing its maximum loan size for care home customers to £10 million, and announcing it had seen over £180 million of care home enquiries since it launched its specialist team in September 2021.

The bank has seen significant growth since launching in 2020, revealing in June that it expects to reach profitability in 2022, following investment of £55 million from British Business Investments – part of the British Business Bank – and existing investors.

Nick Baker, Chief Commercial Officer at Allica Bank, said “Brokers and SMEs shouldn’t have to choose between rates and service when looking for a commercial mortgage. Allica Bank is proud to offer both, with our new even more competitive rates – which are typically only offered by the high-street banks – alongside the award-winning service of our business development manager team.

“We’re particularly excited, too, to provide additional rate reductions for SMEs looking to reduce their carbon footprint. Allica is continuing to explore ways we can encourage businesses to invest in sustainability and a greener future.

“Once again, it’s been the unwavering support of our broker community that has enabled us to make these enhancements. Our brokers have been huge allies of Allica since we launched to market, and their extensive feedback throughout has helped us continue to shape a proposition that works for them and their customers.”