The commercial mortgage market has changed significantly since the beginning of this year. This is mainly due to the ongoing liquidity crisis in the global market which is having an effect on the confidence of lenders and investors.
Many of the large commercial lenders in the UK relied on the wholesale and securitisation markets to obtain funding for new business. The effect of the collapse in the sub prime market in the US has meant that the securitisation markets are now effectively closed. The last securitisation that took place by a commercial lender was in November 2007.
Commercial lenders have a limited supply of funds at the moment and fresh funding lines are unavailable to many. This means that many commercial lenders have had to stop lending until the securitisation markets reopen.
There are considerable pressure on the government to clear the blockage in the money markets and they finally seem to be addressing the situation with the announcement that the Bank of England will swap government bonds for mortgage backed securities. This obviously will not help lenders who need to securitise their books now.
There are still commercial lenders that are less dependant on securitisation and lend off their balance sheet but they are understandably being stricter at the underwriting stage. With a large influx of business and limited funds they are being more selective about the deals they offer and who they give them to.
This is why it is so important to choose the right commercial mortgage broker to help you navigate these murky waters. Commercial Lending have access to balance sheet commercial lenders and have good working relationships with these companies. We also have extensive experience in working in the commercial mortgage market.