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Market insights from our Property Finance Director

With over 35 years in banking and property finance I have been round the block a few times and seen a fair few periods of economic challenge. Every one is of course different.

Following the Truss / Kwarteng mess, the markets got spooked, interest rates were hiked (albeit this was probably on the cards at some point) and everybody stopped making decisions. Investors sat on their cash, pricing real estate investments became difficult against future rate uncertainly and funders had to make decisions on stress testing on the hoof resulting in fixed rate products moving as quickly as a pass the parcel and serviceability tests meaning leverage was in a downward spiral. Also added to the mix we then get the usual doom and gloom merchants making the headlines around house price falls.

Yes there may be a correction in house prices but depending on whom you talk to this could be 5-10% as opposed to a crash and the fundamentals of supply and demand imbalance in housing remains. Equally, liquidity remains strong in the property and investment markets which will ultimately want to find a home as cash deposits are not the medium-term home for value and inflation proofing.

Whilst we have seen some stability return to markets and swap rates reduced over recent weeks this has not filtered through into decision making or rates. It’s like the wind down for Christmas has come a little early and all conversations point to “let’s see where we are in January”.

At some point the parcel will stop being passed from person to person, the music will stop and cash will be deployed and lent as before. Lenders need to lend and competitive pressures will come to the fore – but I suspect not before Christmas.

Yes serviceability will be a keen focus for investment debt assessment and rates will probably dictate lower leverage. Equally, development lenders will want to ensure sufficient buffers exist within finance cost and contingency provisions but appetite for viable deals remains.

At Cowgills we still are getting deals across the line with funders with recent completed and approved deals including:

  • £5,400,000 bridge facility to assist with 100% of purchase price for industrial land with detailed planning.
  • £1,748,000 10 year 65% LTV Interest only Term Loan secured on commercial investment portfolio
  • £4,600,000 5 year part amortising investment facility secured on industrial investment portfolio at a margin of 2.21%
  • £5,772,000 residential development loan. 8 executive houses Greater Manchester. 65% Loan to GDV

It’s a time to hold your nerve and in the meantime sit back and enjoy the mince pies and mulled wine!


The information was correct at time of publishing but may now be out of date.

Posted by David Rainford
28th November, 2022
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