Good to see some coverage recently on the issue of businesses taking out interest rate protection policies. It didn’t quite cover all the issues however and as you may expect it painted the banks in a bit of a poor light. The issue about these interest rate contracts (aka SWAPS) is that businesses should not feel forced into them and then, if they decide the principle of the thing is right, that they make sure they get the right deal. Most SWAP contracts are ‘portable’ but also you don’t have to take out a contract with the bank that is issuing with the loan. Clearly as these contracts are profitable to the banks they would want you to use them – but if there is a better deal to be had from, say, NatWest to cover a Lloyds bank loan then that is perfectly possible.
