Commercial mortgages contracted in March despite increased lending

28 April 2010

Written by David Whittaker

Commercial mortgage borrowing from banks fell by 5.7 per cent in March, according to British Banking Association (BBA) statistics, while the other mortgage borrowing increased.

Low interest rates have had an effect on the consumer behaviour in the mortgage market with more homeowners making higher repayments on their debts and holding higher deposits, which have risen 6.4 per cent in the past year.

With this, the banks (who are the main providers of mortgages) have increased their net mortgage lending by 4.5 per cent compared to this time last year, exceeding the annual growth of one per cent seen in February.

Despite this, commercial mortgage borrowing has fallen due to reduced demand and companies finding alternative sources of finance.

BBA statistics director David Dooks said: "Uncertainties in business trading are constraining company demand for finance."

Although commercial mortgage lending is currently reduced, other studies have shown that this may change.

A survey by the Royal Institution of Chartered Surveyors found that expected rent rates for commercial property have risen in London at a faster rate in the first quarter of 2010 than in the last two years, increasing the potential income made from letting commercial property.

Find out more on our commercial mortgages and how we can help you achieve your aims - enquire online.