I’ve been recording certain interest rates on a weekly basis for several years, and it’s interesting to note that, for the first time in decades, the five-year swap rate fell to under 3%. (For the uninitiated, the swap rate is the rate at which banks will lend to each other.)
The significance for those who need Medical Equipment Finance or any other form of Asset Finance is that you should be able to secure a five-year loan at close to 5% (assuming that lenders need ~200 basis points for margin and risk).
Also for the first time, the best three-year and five-year term deposits are in ‘lock-step’ at 4.2%.
I had coffee with a banker the other day to discuss his ‘appetite’ for a Goodwill Loan for one of my Radiologist clients who is negotiating the purchase of shares in an established Medical Imaging business. He very clearly identified the cycle that all banks follow, although they’re rarely in sync.
The banks shift back and forth between loose and tight credit policies. His bank is currently in a tightening phase for Goodwill Loans due to a growing number of bad and doubtful debts, mainly among Dentists. It reminded me of my experience at GE Healthcare where the ‘pendulum’ swung back and forth between a focus on market share and a focus on margin.
Monitoring the banks’ fluctuating appetites for the various asset classes is one of the core competencies of a good finance broker. So, save yourself a lot of time and hassle by engaging Sooner Solutions to source the right facility and lender for Medical Equipment Finance, Commercial or Residential Mortgages, Loans for Motor Vehicles, and Goodwill Loans.
The five-year swap rate is trending down again to just over 3%. This bodes well for those who are needing to finance medical equipment, cars, or other assets.