Banks set to foreclose on property loans
Friday, September 12, 2008
Banks are taking a tougher line with commercial property investors and could foreclose on underperforming loans in the sector in the next few months, according to research from Drivers Jonas, the surveying firm.
Property investors that are unable to bring new equity into their investments, to bring loan-to-value ratios back into line, may find themselves in difficulties, the research suggests.
"There seems an inevitability that situations which are deemed to be "underwater" for the long-term could end up with lenders foreclosing," Drivers Jonas says in its summer investment trends report.
"It remains the case that, if possible, banks are using LTV (loan-to-value) breaches to renegotiate loan terms but they will not hesitate to act if they feel that the loan is under threat," the report continues.
It says that banks will become more vocal in the next few months as the risk of tenants failing to pay their rents rises, along with the continuing pressure of capital write-downs across the banking sector.
Read more at Times Online
Property investors that are unable to bring new equity into their investments, to bring loan-to-value ratios back into line, may find themselves in difficulties, the research suggests.
"There seems an inevitability that situations which are deemed to be "underwater" for the long-term could end up with lenders foreclosing," Drivers Jonas says in its summer investment trends report.
"It remains the case that, if possible, banks are using LTV (loan-to-value) breaches to renegotiate loan terms but they will not hesitate to act if they feel that the loan is under threat," the report continues.
It says that banks will become more vocal in the next few months as the risk of tenants failing to pay their rents rises, along with the continuing pressure of capital write-downs across the banking sector.
Read more at Times Online
Labels: commercial mortgages, property prices, UK Interest rates
