Impact of the interest rate increase on the licensed trade.

Thanks to the Morning Advertiser for a great article explaining the impact of the recent interest rate hike on the licensed trade.

The main points being;

  • A £250,000 mortgage will increase by around £30 per month.
  • A £500,000 mortgage will increase by around £60 per month.

For the typical publican therefore, the impact of the hike on their mortgage payment will be negligible.  The greater effect is likely to be on those in leasehold pubs who have high levels of unsecured or personal debt, perhaps having used credit cards or personal loans to fund the purchase of the business.

Michelle Perrett explains why there is little to worry publicans (The Morning Advertiser).

Action points

Get a free commercial mortgage quotation to ensure you are on the best possible rates.
If you have significant amounts on credit cards consider an alternative to repay them and get onto a fixed rate deal.
Check the terms of any unsecured lending and make sure you’re getting the best deal.

Check the impact of the base rate increase on your mortgage

The consensus is that the general effect will be minimal with mortgages and pub values not being greatly affected.

The main threat is from any loss in disposable income, or the perception of a loss in it.  This might have an impact on trade which could potentially have a much larger impact on the pub trade than the actual interest rate rise.

Take action now to ensure that your business trades through the rise successfully.

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