As an independent broker we have to know who’s lending within property development finance across the board to enable us to provide the best service and offerings to our clients.
Given this we believe we have valuable insight into knowing if more lenders are getting back into building loans, development finance, property development loans or whatever you want to call this short-term secured lending for property development.
So, to answer the questions of whether more lenders are getting back into funding property development? Yes, we are now seeing some high-street banks and building societies developing and appetite again. We have actually just recently added some high-street banks and building societies to our board of lenders who are now interested in development finance.
We’ve heard some people say that it’s like pre-2008 crash times again. However, we think that although lending has increased in this area, it isn’t the same as before. The larger lenders are more cautious with the lending on these types of products with lower loan-to-values. This reduces their risk and ultimately the risk to our economy given the major roles they have within them.
We have noticed that loan-to-values have increased more in commercial mortgages and standard residential mortgages and are slightly weary to what will happen if house prices fall dramatically. We are not sure that Mark Carney’s comment about potential significant house prices drops if we have a no deal in Brexit is particularly helpful as his comments have a self-fulfilling effect on this! Next thing you know people looking to buy houses will become warier about buying a house, slowing down the liquidity in the market and leading to house price falls.