Commercial Mortgages: What’s happening in the market?

We’ve seen a lot in the media lately about what’s happening in the residential mortgage market and as a result we’ve had lots of questions about what we’re seeing in the commercial mortgage space.

On a positive note, appetite amongst lenders would appear to be just as strong with no restrictions being seen on LTV’s (Loan to Value) and all sectors are still being considered. Terms are still being issued with LTVs up to 75%.

We have seen a few lenders increase their minimum loan amount which does make the smaller properties more difficult to place, though we’ve seen for a while that there is a definite gap in the 2nd tier market for loans under £150k.

We’ve seen a hike in the fixed rates being offered on Commercial properties which are quite a jump from the current all in variable rates. For example, on deals with a variable rate of 2.8-3% over base, fixed rates are now around 8-8.5%, even amongst the high street lenders. We’re now seeing that some of the challenger banks are competing with these rates. Of course, these rate increases are having a knock-on effect on affordability calculations which can restrict the amount borrowed.

We’ve also seen one of the specialist lenders introducing 10-year fixed rates in the last week which I think sends a positive message.

Overall, we have probably seen a slight slowdown in commercial enquiries, with borrowers wanting to take stock of the market. However, for those who are still keen to proceed, terms are still being offered.

If you, or someone you know is looking to purchase a commercial property for trading or investment purposes, why not get in touch so that we can find the best terms.

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