Four illuminating responses came from the four clearing banks when Humberts’ Tetbury office in Gloucestershire rang to discuss terms on which they would lend £100,000 to a farm.
At the time, bank base rate was 13%. Humberts requested terms for a 25-year loan while offering a 200-acre, mixed farm as security. The replies were salutory.
Bank A: First three years fixed at 16% or first five years fixed at 14.25%, then interest rate review. Interest charged quarterly.
Bank B: Setting-up fee 1% of loan. Interest rate base plus 3%, with payments required quarterly.
Bank C: Secured loans, fixed rate 16.5%, interest quarterly. Unsecured loans fixed rate 18%, interest quarterly.
Bank D: Interest rate generally base plus 2%, interest charged monthly.
