Commercial mortgage debts incurred before the recession are beginning to mature, which will create a "wave of defaults", it has been claimed.
The
property investment market will see a "wave of defaults" as borrowers may not be able to meet the obligations of their complex
commercial mortgage plans, it is claimed.
Commercial mortgage brokers are getting tough with defaulting borrowers and more are expected to follow as the largest commercial mortgage securities taken out before the recession begin to require re-negotiation, according to an article in the Financial Times (FT).
In December, the Financial Services Authority remarked in its Financial Risk Outlook 2010 report that some £160 billion worth of debts for property investment firms will mature in the next five years.
It warned then that banks could decide not to renew debts as they expire.
Jim Tucker, real estate partner at KPMG, told the FT: "The big unanswered question is how to deal with the double whammy of reduced values and reduced loan-to-value ratios.
"In short, a property deal funded at the top of the market could struggle to find half its refinancing requirement."
Posted by Hadji Singh.
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