Over the last year, the team at Assetz Capital have finally seen “substantial rises” in bank interest rates after well over ten years of them “languishing at near zero levels.”
Assetz Capital noted in a blog post that this has led to the Access Accounts “becoming less competitive than they were versus rates offered for some bank savings products.”
Assetz Capital recently “raised the rates on the Access Accounts and saw healthy net inflows of capital for a period.” However, after continued interest rate rises, the Access Accounts “are not now attracting further new capital on a net weekly basis, and [they] instead are seeing modest net outflows.”
If this was allowed to continue, then existing loans “within the accounts that had future funding commitments, such as development loans with monthly draw down requirements, may not be in a position to be funded.”
The accounts have “to be able to service future funding requirements of existing development loans as a development can lose substantial value if funding ceases mid-development and this is something [Assetz Capital] always seek to avoid as investors, as well as borrowers, would often see material losses as a result.”
In order to avoid that situation, Assetz have “taken the difficult decision to start to carefully manage withdrawals from the Access Accounts to prioritize all existing development loans being fully funded to completion.”
They have now entered Non-Normal Market Conditions “as defined here.” These changes to withdrawals are “envisaged under and described in our terms and conditions and the published account operation rules.”
As at 28th November 2022, withdrawal requests from the Access Accounts “will need to be matched to new investment coming into the account.”
This means that if, for example, “a new investor wished to invest £1,000 into the Access Accounts, they would replace the next queued investor/s wishing to withdraw £1,000.” This matching will be “applied at the time of a withdrawal request being ready to be processed, so after any notice period required for the 30 Day and 90 Day accounts.”
A queue of withdrawal requests “will be in operation, sorted by date of request plus any notice requirement.” For example, “a Quick Access Account withdrawal request would be immediately added to the back of the queue and a 90 Day Access Account would be added to the back of the queue 90 days after the withdrawal request.”
This matched withdrawal and investment process “will continue until such time as all of the loans that Access Account investors hold within those accounts, and that have future funding requirements, are fully funded.”
After that time, withdrawals “will move to being funded by both new investment and also ongoing loan redemptions and repayments.” Assetz Capital expect that “to happen in around 12 months’ time unless circumstances change.”
As clarified in the update, no new loans “will be funded by the Access Accounts whilst they are in these Non-Normal Market Conditions in order to speed the withdrawal process.”
To read more about what this means, you can check the firm’s official website.
For more details, check here.