Categorized | Commercial

Commercial Real Estate Investors May Not Be Able to Refinance Loans

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Many commercial property investors in the United Kingdom may be facing a very difficult situation, as there is a growing possibility that banks and lenders will not refinance a significant portion of their outstanding loans. Experts believe that more than one hundred and fifty billion dollars in loans will not be refinanced.

With fears of a looming debt crisis, and potentially a national or even global recession, banks have tightened lending restrictions more so than ever. Roughly half of the outstanding loans owned by investors are underwater, which has made refinancing them in the current market a certain impossibility.

Refinancing is not the only lending option that is being impacted by tightened credit restrictions. Lending in general has been reduced across the nation, as banks struggle to cut back on their losses. A number of banks have actually stopped lending entirely due to the condition of the current market.

Only twenty or so banks have indicated any possibility of expanding their lending efforts in the next year. The tightened credit restrictions, and the overwhelming abundance of underwater real estate properties has made the United Kingdom commercial real estate market look eerily similar to the United States residential real estate market.

The lack of lending will likely cause a massive slowdown in commercial real estate performance in the United Kingdom, as investors will not be able to secure funds needed to expand their portfolios. There has been no clear indication if a similar situation will present itself in the residential real estate market.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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