BoE reports commercial property to biggest negative factor on loan demand

Commercial property is expected to have the biggest negative impact on businesses’ demand for loans in the coming quarter, according to the Bank of England’s latest Credit Conditions Survey. The survey, which asked UK lenders and building societies what the main factor contributing to changes in demand for lending are, found that a net -11.6% of respondents expected commercial real estate to affect corporate demand for loans. A net negative result suggests more lenders expect it to lower demand, while a positive result would have meant more lenders expected it to increase demand. It is the most negative outlook lenders have had for demand as a result of commercial property in the past three years. This week’s De Montfort Report showed that UK banks and building societies originated 14% fewer loans for property in the first half of 2017 than they did last year. However, the Bank of England Credit Conditions Survey also found that the availability of credit to commercial property has not changed in the past three months and is unlikely to change in the next three months either. Commercial property prices are, similarly, unlikely to affect credit availability to the property industry or to secured lending to private non-financial corporations.