Improving Criteria for 2010. 23.12.09

Author: Steve Olejnik Posted on: 23 December 2009

It is the time of year when Commercial lenders start putting together their lending targets for the new year. It has been well documented that the High Street banks have been cautious this year and have restricted their lending to the safest of applications. In 2010 we will start to see some improvements and an easing of criteria. We will start to see the results of the Bank of Enqland’s Quantatative Easing programme by about February / March and I expect some new lenders to enter the market bringing welcome competition to the high street.

 

So after a difficult year for commercial borrowers, all bodes well for 2010. The underwriting of applications will still remain robust but I expect improvements in various areas as follows:

 

Commercial Owner Occupier

The Banks will have increased appetite to lend to good trading businesses looking to finance their own premises. Being able to demonstrate affordability will be key but for strong applications, borrowers can potentially gear up to 80% LTV on freehold commercial premises. Expect to switch business banking to the new lender for best terms

 

Commercial Investment

As always, a strong tenant on a long lease will always attract best borrowing terms. There are however improved options available for shorter leases / local covenants and I am seeing a number of deals sanctioned at 70% Loan to Value at sensible pricing. The quality of the property and marketability post the end of a short lease will always be important but there are more lenders available now willing to take a view.

 

Semi-Commercial

Options are also improving for the typical “shop with flats above”. Again, commercial mortgages up to 70% LTV are available with interest rates starting at c4%.

 

Residential Investments

With the limited number of Buy to Let lenders out there, the commercial lenders are filling the gap for the more complex residential investments. Whether it is an HMO, Freehold split into self-contained units or a simple residential property owned by a Limited Company there are now commercial lenders willing to assist.

 

Overall, I expect good things next year! As I always say, if you are looking for finance then it makes sense to speak to a specialist broker who is up to date with the constant changes in lender appetite and criteria.   

 

Watch this space for further updates in lending criteria and in the meantime I wish you all a very Merry Christmas and a prosperous New Year.