Reliable sources have indicated that the value of office, retail, and warehouse space has fallen by around 45% since the start of the credi criisis in 2007.
The fall in values in the commercial sector has played a major part in the pain suffered by the Banks who have had a large exposure to the commercial sector as this was always considered to be less volatile than the residential sector. What the Banks do not factor in to the underwriting was the toxic loans being purchased by the back door which more than out weighed the normal cautious approach that the Bank Officials took with the average customers. What was the point in having an underwriting guide line only to throw the rule book out of the window on loans purchased from sub prime lenders. What did Granny say If it sounds too good to be true it is.
Old time logic but its as true today as it was in the past, in the dash for growth commonsense was a stranger, and we are having to pay a very high price for this today and for a long time in the future.
We are lucky in so much that London has alawys proved to be an attraction to our friends from overseas who seem to think that the sreets are paved with gold, not quite but with the massive fall in property values, London is seen as bargain City, and as we all know cash is king, and some very hard bargains are being fought over property that will provide a strong yield now and good capital growth in the long term.
With another 50 Mill being released into the British economy by way of quantitive easing, this should prompt the Banks into turning on the taps of cash to help business with access to Commercial Mortgages Commercial Finance, and Business Loans. It maybe sometime before our Banks remember what they are there for and that wonderful word that seems to have been deleted from the Banking book of word that they can use, YES. There that was not so painful was it, all you have to do now is remember to keep using it and we will get out of the rut.
Michael Alexander acommercialmortgage4you.co.uk
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