Bank Lending on Property Continues to Rise

LONDON-Banks are still looking to invest in property and the interest shows no signs of slowing, according to new figures by the Bank of England.

The figures show lending to property companies was up 6.4% in the third quarter to £81.7 billion ($129 Billion). DTZ Research said: “This represents the fastest quarterly growth rate since the first quarter of 2001 and provides further evidence that banks are still keen to increase exposure to the commercial property sector.”

DTZ puts the total of private debt outstanding to property companies at £110 billion ($173 billion), or £115 billion ($181 billion) if securitised debt is taken into account. The rise in outstanding debt is taking place in weak leasing market and rising covenant risk, and there is the suggestion that lenders are increasing margins to reflect that. Banks have recently tightened loan terms despite pressure to maintain or expand their loan books.