Commercial mortgage enquiries

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 01. April 2022

Interested in hearing from mortgage brokers about commercial mortgage enquiries.

  • What is the typical level of commercial mortgage enquiries that you receive
  • Have they risen or fallen over the past few months?
  • Why do you think that is?
  • What do you think will happen in the near-term?
  • What are the challenges with this kind of business and how can they be overcome?

4 responses from the Newspage community

Star Quote
"Commercial mortgages are not something that I go actively looking for, but existing clients will sometimes ask me about them. Usually I get two or three enquires a year, with most of them tending to be business owners looking to purchase the business premises that they currently rent. I have a number of commercial mortgage specialists that I work with and can refer these clients to. I know they'll get well looked after and it's worked really well for us all. The big issue for commercial mortgages at the moment is most commercial finance is written on a variable rate basis, so in a market of rising interest rates we see mortgages becoming more expensive than some business owners have seen previously, which adds a degree of extra nervousness into the mix for clients, especially those who have never had any type of commercial mortgage borrowing before."
Star Quote
"During the pandemic, many commercial lenders, including much of the high street, shut up shop altogether. Those that continued to do business became far more selective about who they would lend to. Sectors such as leisure and hospitality were least favoured by lenders, as they were hardest hit by the restrictions, and hence most likely to default. But for some, downturns often create opportunities and the pandemic enabled savvy buyers to find a host of attractive commercial property deals, with the main issue being finding a suitable lending partner to complete the deal. During the latter part of 2021, as restrictions eased, more commercial deals completed as lenders' appetites returned. There are two types of commercial property buyer. Owner operators with strong balance sheets will always be preferred by lenders and this can result in lower interest rates and higher loan amounts being offered. In the eyes of the lender, risk is reduced as the finance is to a tangible business with a proven trading history. In addition, owner operators are often moving from rented to owned premises, so the additional cost of a mortgage is much reduced, or even negligible. For commercial property investors, unless the tenants are high quality and on a strong lease, it's not as easy. Investors need to do their due diligence to know their market, both by sector and geography. Investors will ideally seek out deals with potential for increased rent and capital appreciation through underused space, development opportunities, or through new leases and increased rents."
"Commercial enquires have been pretty consistent over the past few months although I suspect they'll begin to slow down as rates rise and a potential recession looms, meaning more empty units not generating rent. The new homeworking culture is also hanging over commercial property like the sword of Damocles."
"As a business, we primarily operate in the residential and regular buy-to-let space. The latter often leads to some of my investor clients wanting to purchase a commercial property, so I always ensure I have a relationship with a knowledgeable commercial broker. I have found this year to be very steady, with some landlords exploring commercial property as an investment and also enquiries from business owning clients looking to purchase property. How long this lasts is anyone's guess in the current climate. There's a huge amount of uncertainty and big ticket purchases could be seen as too much of a risk, even by experienced property investors."