The Brief: Some commercial lenders have reduced appetite as many are unsure where mortgage rates and property values will trend, according to a report by Financial Times. Commercial property investors were hopeful that business activity would rebound after COVID restrictions were lifted but soaring energy costs and inflation have instead negatively impacted property deals, according to the report.
Why It Matters: The lending environment is different today compared with last year. The UK commercial real estate lending report - year-end 2021 by Bayes Business School reported a 48% uptick in loan origination in the previous year, or £49.7 billion, the highest volume since 2015. Lender appetite was also healthy, recording a 94% willingness to lend to the prime office sector.
Finanze Foresights: During the peak of the pandemic within the commercial mortgage market lenders were more discriminating against industries that risked default. But as lending appetite resumed, it turned out that increasing interest rates and a less favourable economic outlook have made sentiments sour again. Commercial property investors may find good deals in the market, but getting a suitable lender may be a challenge unless commercial borrowers have a strong balance sheet and tenants that are less affected by market volatility.
--
To the fullest extent permitted by law, Finanze Ltd are not responsible for any errors or omissions in any statements, views, opinions, facts, figures, commentary or any other material in the articles contained herein, or for loss arising from its use or performance, or for the results of any actions or lack of action taken on the basis of information provided in articles.
The topics covered in articles are complex and do not substitute the need for financial, legal, accounting, tax and other advice before making any decisions or taking any action based on information in articles.