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Banks Take Prudent Approach to Property

LONDON-Banks are becoming more cautious about property lending, according to a new survey from Jones Lang LaSalle and Investment Property Databank. Speculative development finance accounts for no more than one per cent of all new loans.

By Graham Parker | Updated on August 14, 2001

LONDON-Despite record levels of outstanding property loans, a new survey from Jones Lang LaSalle and Investment Property Databank shows that banks remain cautious about property lending. Bank of England figures showed that for the year to June 2001 total property lending increased by £15.0 billion ($21.3 billion) to £63.7 billion ($90.45 billion) – the largest annual increase ever recorded. But JLL and IPD’s analysis of lending transactions shows no evidence of a reckless approach to lending.

The analysis shows that re-mortgages remain represent 35% of current lending compared with an average of 21% in 2000. And half of all lending was directed towards investment property, down from an average of 65% in 2000. Lending for development activity remains a very small part of the market. As in Quarter 1 development accounted for 12% of lending, and just 1% of this was for speculative development.

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