Insurance Companies Offering Loans to Commercial Property Owners After Banks Retreat

Posted on 14 June, 2012 by Jodee Redmond

Insurance companies are seizing the opportunity to offer loans on commercial properties. This comes in the wake of more traditional lenders either scaling back their commercial interests or deciding to stop offering this type of financing completely, according to a study conducted by CBRE Group Inc. Insurers can provide loan funding for up to 69 per cent of a property’s value, compared with an average funding level of 66 per cent from more traditional sources.

According to the CBRE Group study, the interest rate offered by insurers on commercial property mortgages is 20-30 basis points lower than average. (Each basis point is 0.01 of a percentage point.) A lower interest rate on a larger loan makes the prospect of dealing with an insurer an attractive one for owners who are looking for the best deal for their financing.

Banks in Europe have been cutting back on their lending practices since the third quarter of 2007. They have incurred €525 billion (£426 billion) in losses since that point, and are looking for ways to strengthen their balance sheets to comply with bank capital rules as directed by the Basel Committee on Banking Supervision. Existing loans may be sold, and repossessed properties may be sold so that the bank can recoup the amount of the outstanding loan as quickly as possible.

A total of ten insurance companies accounted for 14 per cent of UK businesses writing new loans for commercial properties in 2011, and this figure may rise to 20 per cent over the next several years. The insurers which were especially active in the commercial property loan market included Aviva Plc, Canada Life Group, Metlife Inc., and Prudential Plc. In contrast, the Societe Generale (GLE) SA , and Eurohypo AG, Commerzbank AG made a decision to stop all new lending starting in the fall of 2011.




Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Recent Posts

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants

BA cuts 12,000 jobs, unions hit back

Media Streaming Service See Record Subscriptions

Covid-19 Causes Millions To Claim UK Furlough Scheme