Property Loans Default

The number of commercial property loans in default has soared 400% in just 1years, according to a report.
The study of bank lending to the commercial property industry illustrates that while the amount lent continued to rise in 2007, nearly four hundred loans slipped into default, up from fewer than eighty in 2006.
Although the collective value of the loans – at £250m – is somewhat small, it suggests that a increasing number of smaller property investors and developers are failing because of the present financial crisis.
Unexpectedly, the number of commercial property loans that are in breach of financial covenants, but not yet in default, improved over the year. Loan breaches reduced from 1,900 – 1,050, suggesting banks are working harder to resolve debt problems before they move to default.

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