Credit crunch ''will not harm commercial property'' - commercial mortgages

24 October 2007

Some £175 billion has been lent to commercial property firms in the UK, figures from the Bank of England have shown, but analysts do not believe that this spells disaster for the sector in light of tighter lending conditions.

Despite financial market troubles spelling an uncertain future for those looking to borrow large sums, the sector will continue to perform well, not least in the north-west, the Manchester Evening News has reported.

The Bank of England''s figures have shown that outstanding debt in the sector rose by almost five per cent in the second quarter of 2007 as more firms with commercial mortgages looked to expand, but continued strong performance is likely to give the market a helping hand, according to some analysts.

"Greater Manchester''s property market remains vibrant and the fundamentals are in place for a period of continued growth," said RBS Commercial Banking director of property finance Shaun Smyth, speaking to the newspaper.

"I would expect investors to strengthen their portfolios within what remains a relatively stable market environment across the north-west," Mr Smyth added.

The Bank is expected to give borrowers a further boost with a widely-predicted interest rate cut in early 2008.