Commercial Mortgage

As with the majority of the mortgage and housing market in general, the commercial mortgage sector has suffered as a result of the overall economic downturn. Throughout the UK the past year or so has seen existing successful companies through to viable start up companies struggling to raise sufficient finance because of the dwindling numbers of commercial mortgage products that were available on the market. This has inevitably left a good proportion of small to medium sized firms, entrepreneurs and investors with little scope to pursue or develop a wide range of business activities without having to pay a premium to do so.

However, as the British summer weaves its way along in a multitude of seasonal swings, the commercial mortgage market has also begun to heat up as there appears to be some funding lines opening up as lenders appear to be returning to the market. This will have the knock on effect of increasing competition which will provide the stimulus needed for more products to become available for those looking businesses looking for a commercial mortgage to purchase their premises or for commercial property investors looking to finance either a purchase or remortgage.

To illustrate this rise in positivity, buy-to-let and commercial mortgage specialists Mortgages for Business has recently reported to have seen a 41% increase in new mortgage cases since January 2009, which it attributes to an upturn in the number of property investors returning to the market.

With the residential housing market also showing tentative signs of growth it appears that commercial mortgage transactions are showing the healthiest signs of improvement with the number of new cases more than doubling over the first six months of the year.

Commenting on the current commercial mortgage market conditions, David Whittaker, managing director of Mortgages for Business, says: "There are the first glimpses of a shift in the commercial sector, with enquiries and cases on the increase. This is significant as the commercial property sector has suffered horrendously over the past two years, but, we appear to have turned a corner. With the number of mortgage cases gaining momentum it is clear that banks are open for business and willing to lend, as long as the numbers stack up."

Further momentum will continue in the form of increased funding becoming available to lenders which, hopefully, will in turn become available to borrowers through increasingly competitive commercial mortgage products. There is no doubt that there are some businesses that will continue to struggle but as with any market downturn, winners will emerge and it will be those firms that have greater control over their financial situation that will come through relatively unscathed. The commercial mortgage market is showing signs of some recovery but there is still some way to go. There are promising signs that a degree of positivity has returned to the market, so with this in mind the commercial mortgage market is certainly one to watch for in the later part of 2009 and early 2010. (Mark Cijo Jn)

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