Competition among banks is very intense, and several banks state that they have never previously seen a stronger market for debt capital. All banks have a high willingness to lend and clear growth ambitions, while the bond market remains open and provides an attractive alternative to bank financing. For a standard loan — with a 50 percent loan-to-value ratio and a three-year maturity — margins declined by 10 basis points (bps) in the fourth quarter, to 163 bps. This represents a significant quarter-on-quarter decline, particularly considering that margins were already at a low level.

In the fourth quarter, swap rates have been slightly above 4 percent, broadly unchanged from the third quarter. This implies that the decline in financing costs is primarily driven by bank margins. For the majority of new loans, the all-in borrowing cost is around 5.75 percent. Market participants securing the most favourable margins face an all-in lending rate of approximately 5.2 percent.

Do you want to know more about the findings from the banking survey? Please contact Robert Nystad at nystad@union.no or 906 19 758.