Commercial mortgages ‘seeing a significant resurgence’ – Baptise

by: Amy Baptiste, head of specialist finance at LDN Finance
  • 28/03/2024
  • 0
Commercial mortgages ‘seeing a significant resurgence’ – Baptise
There’s no denying that commercial mortgages are seeing a significant resurgence in terms of lender and borrower appetite.

We have noticed the commercial market gaining noteworthy traction following the fallout of economic uncertainty and volatile interest rates. However, for investors who can afford it, the current climate is seeing an increased number of clients taking advantage by snapping up properties and expanding their portfolios.

At LDN Finance, we have seen the number of commercial and specialist mortgage enquiries increase since the beginning of the year. Client demand and urgency in commercial funding requirements has largely come from business takeovers, which include commercial premises, below-market-value opportunities in mixed-use schemes and hotel acquisitions with government contracts.

While the commercial market may not be in its strongest position right now, there is opportunity for those willing to take risk, coupled with an increased amount of excitement surrounding the growth potential of this sector. It’s therefore unsurprising that cash-rich investors want to take advantage of opportunities and expand healthy businesses.


‘More competition’ would benefit commercial sector

In assessing the current lending landscape, yields are tight and no deal is straightforward. But, my opinion is that we have seen a wide range of lenders increase their product offering in this space, therefore serving the increased appetite of clients.

To ensure deals can still be funded successfully, lenders are reviewing the strength of these clients by gauging the funding level required to support the interest rates, and whether there are limitations on leverage.

Looking ahead to the rest of the year, I believe the commercial mortgages space has the potential to grow more than any other sector. It should be the one place that new lenders consider targeting to increase business volumes.

The bridging and development sectors have been flooded with funding, but commercial finance has been some way behind for a while now – more competition should only benefit the sector.

Working directly with clients, my advice to lenders is that efficiency is a key skill that needs to be looked at in this sector. There are only a selected number of lenders with real appetite that pride themselves on a pragmatic service.

It is great that deals eventually progress over the line, but how you get there is just as important. In more recent months, I have noticed that delays occur more often, and normally as a result of systems and processes simply not being efficient enough.

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