Commercial mortgage holders 'could be hit by spending cuts'

02 September 2010

Written by Michael Aglony

Commercial mortgage holders could be negatively affected by government spending cuts, one expert has said.

Speaking to City AM, Peter Hargreaves - outgoing chief executive of Hargreaves Lansdown - said the austerity measures would harm both residential property and office developments.

"These cuts are going to create a glut of commercial space as the public sector vacates buildings," he explained.

Another issue holding the industry back was the lack of funding from commercial mortgages, the specialist noted.

Indeed, the Bank of England posted a fall in mortgage lending in July compared with June; however, the Building Societies Association released contrasting data with regard to borrowing from mutuals.

These institutions, the body reported, had given 11 per cent more cash to those purchasing properties in the same period.

Mr Hargreaves commented his greatest worry was that the coalition government would avoid making the deep cuts announced in June's Emergency Budget.

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