The leaves may be falling down but commercial mortgage lending is up this autumn as the banks, building societies and other providers strive to hit their year-end targets. Andy Elley, Head of Commercial gives his view on what brokers can expect to achieve for their clients in terms of pricing and appetite to lend in the run up to Christmas.
At the risk of waffling, I will do my best to keep this overview brief.
On a daily basis we are currently working regularly with around eight to ten reputable commercial mortgage lenders. I have to say we were all deeply saddened to see Market Harborough Building Society withdraw from the market, but it is good to see that some of the other building societies are already stepping up including N&P.
We have already seen some lenders up their repayment profiles to 25 years for commercial investment mortgages, providing that borrowers are under 50 years of age at application.
Lender arrangement fees are still negotiable, ranging between zero and 2%.
Like both the residential and buy to let mortgage sectors, we have started to see an increase in five year fixed rate pricing on commercial deals.
Apart from that, for business owner-occupiers, pricing has remained fairly stable, although it may well start to creep up. For loans between £150k and £500k we are consistently receiving rates at 2.75% -3% above Bank Rate. For the larger loans for experienced operators, in favoured lending sectors, we are seeing rates from 1.6% above Bank Rate. The most competitive rates are being given out in the healthcare and medical sectors because the lenders perceive these sectors and businesses operating within to be lower risk.
For commercial investment mortgages rates are available from 2.55% over bank base rate for loans above £1,000,000 and below this the rates are starting from 3.25% - 3.5% over Bank bases rate.
Overall the appetite for commercial mortgage lending to both investors and businesses remains strong.
- We are seeing an increase in mortgage applications for semi-commercial property – possibly because these properties tend to produce higher yields and commercial transactions are not subject to the additional 3% stamp duty surcharge.
- We have also seen an increase in borrowing requests for properties in the Midlands and the North of England
- There seems to be an increasing demand for property development finance, and the high street lenders have responded by offering to service sub-£500k projects for experience developers
- Lenders are taking a far more pragmatic approach with first-time commercial landlords, providing they have some residential letting experience
For more information please don’t hesitate to give me a call. Remember, we are here to place deals for you – either because you don’t have direct access to a specific lender or because this sector is not your bag and you’re looking to partner with a specialist commercial mortgage broker. Your client remains your client and we’ll share proc fees with you - exact amount depends on the complexity of the case so do ask. You can speak to me directly on 01732 471644 or call the team on 0345 148 9238.
8th November 2017