We have just crawled out, or so they tell us,of vthe recession, but it is so fragile that a small puff of wind could blow us back again because nobody apart from Gordon Brown beliefs it. For us to recover we have to start to feel good about ourselves and our future prospects.Its going to be some time yet before we get that feel good factor and we feel confident about spending money, and its that one small thing that as they say makes the world go around.
The main banks have made borrowing very slightly easier but the change is so small that you would neeed a very sophisticated bit of equipment to recored the change.
Businesses need access to funds to invest in their company, to expand, buy new machinery, emply more staff, move to larger premises, the list goes on but without the available funds it cannot happen. I know from my exposure to the market how frustrated clients are with their banks, who have forgotten what banks are there for, to LEND.
The access to commercial mortgages,finance and business loans is so important to the future growth of the country let alone the individual. As previous market dips should have told us the recovery starts at the bottom and we need our small to medium sized businesses to pick up the baton and start moving forward with the help of our banks.
If the doors to commercial mortgages opened tommorrow you would see a very big smile on lots of faces and the wheels would start to turn.
Michael Alexander acommercialmortgage4you.co.uk
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( 3 / 133 )Commercial Mortgages and Loans 2009
Instead of having a sensible discussion about how we can take the UK out of the DO DO, that we find ourselves in and how to make sure that our grandchildren are not left to repay our debts, our government have now set out their market stall, with fantasy stories about how they are best placed to get us out of the brownstuff and into the sunshine without any pain.
Well if you are that clever why we are in this mess now I ask myself. The other crowd may not be covering themselves in glory at present, but boy do we need a change of direction away from this benefit culture.
The sad thing is that despite all the problems that the last two years have brought us, clients are as keen as ever to grow their businesses, but need help and direction from the top. It still feels rather strange that the having been bailed out by the British public the Banks are unwilling to repay any of that debt by helping businesses to recover and go forward.
I think that it was dear old Winnie who said the further backward you can look the farther forward you can see. What history tells us is that recovery normally starts from the small to medium sized businesses who have taken the opportunity to slim down and get lean and mean in the recession in order that they are well placed to take advantage when the up turn in the market comes along.
We need to be helping our Small to Medium sized businesses because that’s where our recovery will start and we need to get our people back to work paying tax and NI, they are no good to us or themselves on benefits. If only our Banks could work in tandem with the government to open the funding lines to commercial mortgages, commercial finance and business banking, we could start turning the corner now.
There is no lack of enthusiasm in the business community, it’s very positive, but to survive we have all had to make sacrifices and cutbacks in our business and home lives. What we need now is a shot in the arm to kick start the economy and some real help from our Bankers to oil the wheels of progress. What our Banks do not seem to have taken on board is the real bitter taste we have in our mouths at what we have as a nation have had to give our Banks in order that they would survive, due entirely to the Banks previous lending policy which was a bonus driven culture in the rush for growth, where common sense and basic lending principals were ignored.
The mention of the large bonuses which some banks have indicated they will be paying their staff is like stab in the back in the face of the money that they have had from us to enable them to survive, and they make a very quick return to the bonus culture which appeared to be at the very heart of the downfall of the Banking system.
When sanity returns to lending and the Banks realize they have a duty to help in the recovery, we will be on the road to growth and access to commercial lending will be there to help our businesses to start the long process of a return to black balance sheets and a smile on our faces.
Michael Alexander acommercialmortgage4you.co.uk
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( 2.8 / 119 )When some one of the statue of British Land makes a statement regarding the current state of the Commercial property market that there are signs the 'worst storm in real estate history' might have passed, after British Land revealed the value of its portfolio increased by 1.4% in the second quarter of the year. The UK's largest landlord and developer said that 70% of its properties had increased in value since June, with a positive shift in investor appetite combined with limited stock benefitting market valuations. It added that transaction volumes had however remained low, while rental income grew 0.7% overall, as a result of a 2.7% rise in retail rents, but a 2.3% decline in offices. While optimistic for the future, Chris Gibson-Smith, British Land chairman, said he was mindful that the waves caused by the financial maelstrom of the last two years had not yet settled.
With that in mind how do we see the market in the short term. With the Banks still holding onto their cash we cannot see any real changes in the immediate future the mind says yes but the body is unwilling to part with the cash.
The demand is certainly there and our own experience in the current market reflects the interest that clients have in purchasing Commercial Property to run their own business or as part of their investment portfolio.
We have to remain positive that we can get the Banks to say yes and of course we do win a great deal of the battles but it would be nice to say yes to a lot more clients who should have the benefit of Commercial Finance to take their business forward or to build up a portfolio. What we are not seeing is the demand for Commercial Mortgages with self certification of income or with bad credit. Is it that these clients have just given up or has the cream risen to the top and what we are now seeing are clients who have done their due diligence and who deserve help because they have a viable business plan.
We are certainly having to work that much harder to help clients and to make the best presentation possible to the lenders to stand any real chance of success with our application. Gone are the days when the back of a FAG packet presentation together with a quick pint and a chease sandwich in the saloon bar would bring success. Our friendly bank manager has long gone to be replaced with a body that just wants to sell you a product in order to meet targets.
As an adviser we need friends in the industry and good contacts are worth there weight in gold dust as we try to extract the best deal that we can for our client with someone who wants our business and trusts us to not to introduce poor quality business, because if we break that bond of trust we will not be welcome at the breakfast table. We need to spend time cultivating good Commercial Mortgage contacts and to network as much as possible, its amazing what you can achieve when have some good friends in the business and it takes time to buils up a good circle of contacts and networking is a great way of making it all happen.
Michael Alexander acommercialmortgage4you.co.uk
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( 3 / 144 )The Grand Old Lady of Thread needle Street has again held the BOE base rate at 0.05% and will continue with the quantitive Easing programme with another 25 million being injected into the system coupled with 31.5 million which will go into RBS/Nat West and Lloyds rescue.
Does all this mean that arranging a Commercial Mortgage will be that much easier in the light of the extra cash being put into the system, well you would think so and what a nice way to repay the general public who will own around 84% of the bank.
I think that we will find on Monday morning when we go cap in hand to these banks asking for help it will be the same short sharp NO that we got last week, after all they do have to keep some of the money back to pay the bonuses that have has such bad publicity and quite rightly so.
The sad thing is there is no quick fix we have mortgaged away the future of our children in supporting the banks and just how quickly will this very conveniently be swept under the carpet, far quicker than we could ever imagine.
If we the general public whose hard earned cash has been pumped into the Banks could the benefits of this action in our everyday lives, there would be far more understanding of the current position. The Banks have been bailed out seem to want to return to the same position that they were in prior to the downturn and fail to recognise the anger that is felt by the public at the bonus culture and the very high charges that we now have to pay for our day to day Banking.
If our Banks could see beyond the next bonus, they would be trying to repair the very serious loss of confidence of the public in the Banking system and the rewards that seem to go hand in hand with failure.
Lets try a very different approach and see how the public react, START LENDING AGAIN TO THE GOOD CLIENTS WHO WANT TO GROW THEIR BUSINESS AND INVEST IN THEIR FUTURES AND WE CANNOT DO IT WITHOUT ACCESS TO COMMERCIAL MORTGAGES FINANCE AND BUSINESS LOANS. SIMPLES.
Michael Alexander acommercialmortgage4you.co.uk
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( 3 / 148 )It would be nice to report some good news for a change, Banks and Building Societies are awash with cash and the housing market is taking off and the Commercial It Mortgage lenders have come back into the market looking to do business with property development being the flavour of the month and a real helping hand for new start businesses, and lenders being very keen to look at Commercial Investment Property.
There I was having this very pleasant dream and looking forward to the start of a new day and all the problems and issues that have to be solved during the course of the day when I was rudely woken up by our early morning paper boy bringing the written joys of the day.
Well before I got through my first cup of coffee the headlines of the financial pages screamed at me that it had all been a very pleasant dream on planet Zod and now wake up and smell the coffee. The Banks and other lenders do have the money they just do not want to lend it, and if they have their arms twisted they will certainly make us pay for the privilege
When is this likely to change, will it be anytime soon, I think not. The falling housing market has almost bottomed. out, and we may have that strange bouncing effect over the early part of next year until the market becomes positive and at that point if lenders do not start to lend in earnest we are in big trouble.
As a nation we have come to accept where we are and how we got there, but the general public will not go on biting the bullet, and there is only so many times you can pull your belt in one more notch. For us to go forward we can only do this in the residential housing market and in the Commercial Mortgage market if we have the back up of the banking system. The system has failed us and we have been in the longest recession that we have ever had, and this is not down to the man in the street. Our so called leaders have not risen to the challenge, and seem incapable of laying down a set of rules that would apply to any other business, you will not be rewarded for failure, and you are expected to work hard, that is your job. A bonus is for doing something really out of the ordinary, not for just doing what you are employed to do.
We really need to see the start of the flow of mortgage funds both residential and Commercial, it cannot come soon enough and what a smile it will put on our faces. I still remember 2nd of January 1996 going into the office thinking is this going to be another year of toil and strife, the phone rang at 9pm sharp and did not stop until Christmas, the housing market slump was over. What would I give for the same thing to happen in 2010 ?
Michael Alexander acommercialmortgage4you.co.uk
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( 2.9 / 139 )When one of our previous Chancellor of the Exchequers used those now famous words that we were coming out of recession with the green shoots of recovery, little did he know how many times in the future this phrase would be used and to be wrong, just as he was back in the 1990’s. As it emerges that we are no longer exiting the recession but are in fact still entrenched in the longest one since records began. According to the Office for National Statistics, the economy has shrunk by 0.4% in the last quarter and by 5.9% overall in the last year. It is the sixth successive quarter of contraction and leaves the UK in the grip of the longest period of continuous decline since 1955. This flies in the face of recent predictions that the recession was over and is even more galling when the UK’s major rivals, including France and Germany, are now officially out of recession.
The question is does this cast a further shadow over the mortgage market? To a certain extent the answer is inevitably ’yes’, as any economic failings could spell even greater problems in regards to funding and credit.
However, it’s not all doom and gloom. We are seeing a few exclusive and semi-exclusive products creep back into the more mainstream and even specialist markets which is a positive sign. One specialist market that has suffered badly over the past couple of years through falling values and lending restrictions is the commercial property market but it appears to be finally enjoying a welcome resurgence according to recent statistics.
According to Investment Property Databank Ltd (IPD), commercial property values in the UK, Europe’s largest market for real-estate investment, have risen at their fastest pace in more than three years.
The value of offices, stores and warehouses climbed 1.1% in September from the previous month, according to an index produced by the London-based research company, which represents the largest monthly increase since June 2006.
Other new research seems to back up this new found positivity. A report from Savills suggests that increasing numbers of banks are willing to lend sums of more than £20 million to commercial property investors. The report identified 23 banks in the £20 million and over lending category.
Commenting on the report William Newsom, Savills UK head of valuation, said: "In March when we conducted our last survey, we weren’t aware of any banks prepared to lend above £100 million on their own, but today perhaps half a dozen are prepared to do so."
It was also interesting to read in a recent Financial Times article that investment levels in London are currently higher than the long-term average, with foreign investors and funds eager to snap up prime properties as the market bottoms out.
But despite these relatively high levels of optimism about future growth, 2009 thus far has proved tough going for the commercial market. This is illustrated by an overwhelming 77% of respondents to the Forum of Private Business (FPB) latest quarterly referendum survey which reports seeing the terms and conditions of lending deteriorate in the last year, with many being forced to provide more security to cover their current lending levels.
Just 4% of FPB members said they had seen access to working capital improve in 2009, with 58% believing it had worsened. Of those surveyed, 65% said it was harder to access finance for growth and 68% said the cost of finance had increased.
When asked how the issue of finance could be improved, 36% of small business owners said they wanted to see a reduction in the cost of lending. Further, 27% said greater flexibility in negotiating and adapting terms and conditions to meet the changing needs of their business would be welcome.
The real route to recovery of the UK economy may lay with the availability of proper funding lines to business which at the moment is being strangled by the lack of funds. This is one of the reasons why we have seen so many short term funding providers spring up when in the past bridging has always been the ugly duckling of lending now she is the white swan with funds being made available to areas of the market that the traditional lenders have ear marked as bad news. Short term lenders have grasped the opportunity with both hands and have kept the market alive with their entrepreneurial sprit and willingness to lend where others fear to tread. Lets hope in the markets ahead short term lenders will adapt and find a new niche in the market, Tiuta being one that looks for innovation in lending.
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( 3 / 133 )Having put billions of pounds of public money into the Banking system and practically forced Lloyds TSB to take over HBOS our wonderful government are now trying to break up the big banks to give us more competition on the high street and pour more of our hard earned cash into the banking system to make it all happen.
Please tell me why we did not let the banks stay as they were.. After all they have been around in one form or another for the last two or three hundred years and if it had not been for the greed at the top which unfortunately filtered down to the shop floor where lending at all costs became the target to earn the bonuses we all know about.
If the FSA and the government had been totally ruthless, all of the rotten apples at the top of the tree would have been lopped off and the remaining staff would have been reminded about their responsibilities with new CEO’s who knew how to run a bank and any future lending would have been to clients who stood up to the normal tests of being able to service the debt.
With any down turn in the market where staff is moved on, it always seems to be the staff at the top where the high salaries are being paid who go first. If they are not up to the job then that is the right course of action, but experience is so vital when the recovery comes along and the banks get busy. Without the experienced staff the new blood cannot cope and mistakes are made. How many times must we repeat our mistakes before we look back at what history tells us before we make decisions that can be so damaging to the future growth of financial services.
The next real question is are these new banks going to make things so much better overnight, in short no.The big banks have the funds and the knowledge to start lending now and get the economy moving tomorrow, will this happen, it depends on just how big a stick the government hold and are they prepared to use it. It seems that the banks went cap in hand to the government who listened and came up with our money.
Now we are going to the banks cap in hand to say will you lend some of the money we gave you to stop you going under , and the response is a big NO, fine please give us back all the money we gave you and we will start our own banks and run them as banks should be run.
For the UK to still be in recession is a national disgrace and the banks have a lot to answer for, and it should be them leading the by trying to help those businesses who can make a real difference to the economy and to encourage new businesses without which we may be stuck here for some time. The Phoenix needs to rise from the ashes and to create a path to recovery that we can all follow.
Michael Alexander acommercialmortgage4you.co.uk
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( 3 / 128 )With Commercial Mortgage lenders still very much cherry picking what they will and will not lend on, and then increasing the interest rate margins together with an increased fee structure thank god that we still seem to have short term lenders who if anything have become more competitive on interest rates and charges.
This is not quite what we expect from the this sector of the market when we look back prior to the down turn in the Commercial Property Market where bridging and short term lenders were like drinking in the last chance Saloon, if you did get served the drink it was pretty foul tasting stuff and very expensive.
What the downturn in the market has done is create a niche market for this product, and thank fully there seems to be funds available from a number of lenders with terms that have become more attractive as the Commercial Mortgage drought shows no real signs of improvement.
It is also very noticeable that short term lending which started at one day has now with some providers stretched to 365 days. Developers would have turned their noses up previously at bridging, but have now come to realize that where you are buying property way below the true market value, you can afford to spend a little more on the cost side and still have a very nice profit margin.
These are testing times and it will be very interesting to see how these short term products develop in a changing market as we come out of the downturn where property developers have normal funding available, speed and a very minimum of references has always been the key to bridging and not losing that very important deal where time was in short supply.
Michael Alexander acommercialmortgage4you.co.uk
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( 3 / 120 )I do sometimes wonder if I live on a different planet to the media when I read that the housing market is warming up, there are the green shoots of recovery in manufacturing, retail and people are spending their hard earned cash again.
When did all this happen, I must check that bottle of wine I opened last night to see if it had any very special additives in it. On one hand we have the growing queue at the unemployment office, Lloyds Bank selling off 4 bn in securitised mortgages and now Nationwide securitising some of their loans. The Banks and Building Societies are not lending beyond 90 % LTV even if you are 100% squeaky clean, and if have had any sort of minor blip on your payment profile do not expect to raise more than 80% LTV.
Does this paint the picture to you of the climate of recovery, particularly when lenders are so wary of any risk in their commercial lending, which does not bode well for any sort of recovery in the building industry upon which we rely so heavily?
We in financial services remain as positive as we can in very difficult circumstances and would we miss any realistic signs that lenders wanted to lend, I do not think so.
The pent up demand of first time buyers and those who want to move house for various reasons is massive particularly where we are only able to help around 15/20 % of the clients who enquire, the demand will grow until lenders start to open the doors to the vaults and satisfy the band of discontented potential buyers, and that’s when house prices will take off.
With Commercial Mortgages it is a very similar story with lenders being very picky with what they will lend on and the way in which lenders are increasing their charges both in the interest rate margins and the charges they make to lend money. We are paying a very high price for the BANKS PREVIOUS FOLLY IN TRYING TO GROW AT AN UNREALISTIC RATE WITH NO DUE DILIGENCE AND COMONSENCE BEING IGNORED IN THE RUSH FOR GROWTH.
There is a very long way to go before we can have any real confidence in the economy making a full recovery and we can still have a double bounce to deal with. We should all remain positive but trying to talk up the market when it is not borne out in fact does not help anyone as the banking sector like the politicians have lost the confidence of the general public and we as advisers should talk in plain English and do our best to get the confidence of the public at large back in financial services.
Michael Alexander acommercialmortgage4you.co.uk
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( 3 / 96 )The grand old lady of Threadneedle Street has again left the Bank base rate at 0.5% providing further proof that we have a long way to go yet before we can see any tangible change in the economy.
The Footsie 100 still flatters to deceive with strong growth but very little to back it up. The estate agents and some of our high street lenders would have us believe that the residential market has been positive for some months despite surveyors still wearing their brown trousers when valuing property.
If you believe the rating agency Fitch we still have another 13% or there abouts for the property markets to fall before it bottoms out. As it was Fitch who blew the whistle on the sub prime packaged mortgages in the USA which started the property down turn their opinion must be respected even if we do not agree with it.
With Standard Life stating this week that they would be relaxing some of their redemption penalties on withdrawals from their property fund it must demonstrate that they feel fairly confident about the future of the commercial property market. When a major player like Standard Life who have a massive interest in commercial property give a clear sign that they feel the market may be a little more positive we have to listen.
There will not be a morning when we wake up the birds are singing, the sun is shining and we have just won the lottery and the commercial property market has suddenly gone positive. History tells us that the market will bounce along the bottom for a while until it bottoms out and then we start to see that little miracle as we get a very small positive growth.
With the pent up demand that we have, as soon as lenders decide to lend again when we are into a positive area the market will take off for 12 months and then settle down again for what we hope is another twenty years of growth before we are back in this mess again, but next time around we will be that might wiser and we will not get caught, will we?
Our economy needs a vibrant residential and commercial property market, and how we have wished that it would come back a lot sooner than we anticipate, which is next spring, please god.
Michael Alexander acommercialmortgage4you.co.uk
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