Increased Banks Willingness to Lend Boosts the Property Market

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The number of banks prepared to lend a significant amount of loans for real estate investment has almost doubled over the last 6 months.

According to a property consultancy, there is a massive increase in the willingness of lenders to provide large amount of loans to commercial property investors over the past six months. It is reported that 23 lenders are prepared to lend more than £20 million for real estate investment; and about 6 lenders are keen to lend more than £100 million to the sector at the same time.

While comparing with the figure in March, only 12 lenders were willing to back deals of more than £25 million within the UK market, which was about half of the figure measured in the latest report.

Since the German banks have benefitted from the devalued Sterling, they continue to dominate the finance industry and accounted for more than 50% of the entire lenders’ list; in addition, there are signs of return of the UK domestic lenders – with Royal Bank of Scotland and Lloyds Banking reviving their exposure to the real estate market. Other than that, more institutions – such as Aviva and ING Real Estate – are willing to participate within the lending industry. Yet, the US lenders still seem to remain out of the market.

The above survey was conducted and monitored from a database of more than 100 lenders – which extensively showed the stronger ambitions of major lenders to provide loans following pricing corrections and reductions of funding costs in the property market.

6th October 2009