Banks to cut lending to commercial real estate firms

Banks are expecting to significantly cut their lending to commercial real estate in the months running up to Christmas, a new survey shows. A Bank of England credit conditions survey showed banks are predicting a 22 percentage point drop in lending to commercial real estate companies. The balance of banks planning to increase lending over the next three months dropped from -1.6% in Q3 to an expected -23.9% in Q4. Across the general corporate sector, the survey showed banks are also expecting a drop in lending. The balance of banks expecting to increase lending over the next three months fell from -5.8% in the third quarter to an expected -13.5% in the fourth quarter. The Bank of England said credit lines remained open for smaller and larger businesses in the third quarter but larger firms were increasingly cautious about extending loans. “Lenders reported a slight decrease in demand for corporate lending from small and large businesses, and a decrease in demand from medium businesses in Q3,” the report said. “Lenders expected demand for corporate lending in Q4 to remain unchanged for small businesses, to decrease for medium-sized businesses, and to decrease slightly for large businesses.” To send feedback, e-mail lucy.alderson@egi.co.uk or tweet @LucyAJourno or @estatesgazette