Banks like the Royal Bank of Scotland and HBOS are concentrating on rebuilding their balance sheets after shattering losses in the UK's worst banking crisis since World War II, according to property advisors Savills.
Its annual survey of more than 100 real estate lenders shows that German banks including DekaBank Deutsche Girozentrale and Landesbank Hessen-Thueringen are the dominant lenders in the UK with only two UK banks – Spanish owned Abbey National and Nationwide – in the top 12.
German institutions made up eight of the dozen banks prepared to lend more than £25 million whereas in 2007 only one of the dozen largest lenders by loans granted was German.
'Many of the big banks are out of the market due to their exposure to toxic activities. For lenders with liquidity, there are good returns to be made from lending against good quality assets and those lenders are taking advantage of the changed market situation,' said William Newsom, head of valuations.
Most lenders won't consider financing purchases of secondary buildings in poor condition or badly located, while average loans will cover as much as 60% of a property's value, he added.
Another survey by Cushman & Wakefield of 83 banks found that 49 'are closed for business until further notice,' while 12 others are only lending to existing customers, mostly on deals worth less than £20 million.
Borrowing costs have also increased, with banks charging as much as 2.5% more than the five year swap rate, the benchmark for real estate finance, according to Cushman, the largest closely held commercial real estate broker. Prior to September 2007, the highest lending margin was 1.25%.
