Study shows commercial property loans down this year

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The total lent for commercial property purchases in the first two quarters of 2017 was £17.6bn, down by 24% compared to the same period in 2016.

Reported by Reuters in October 2017, these findings were the result of a survey by De Montfort University, which asked 43 international banks and building societies, 11 insurers and 24 non-bank lenders about their lending activities for commercial property.

The decrease in investing was probably due to the effect of the June 2016 Brexit vote, which has caused investors to be cautious. It remains uncertain how the Brexit negotiations they will affect the property markets in the future,

Peter Cosmetatos, chief executive of Commercial Real Estate Finance Council Europe, said:

“The research is consistent with anecdotal reports of a market that is quiet in terms of transactions but mostly functioning.”

The survey found that North American Banks were the most cautious about lending in the commercial property market.

Central London is still a leading property investment city, with 42% of all commercial property loans being used in London. Savills Estate Agents report a decrease in demand for rented workspace in London, but remains optimistic about the future of London’s commercial property sector.

The Bank of England is expected to raise the interest rate from 0.25% to 0.5% before the end of 2017. This could mean that interest on commercial mortgages tied to Bank of England or LIBOR rates could rise by a small amount, but this may not have a significant effect on the number of loan applications for commercial property.

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