MARKET UPDATE

As we approach the middle of the year it is worth reflecting on whether the funding market has improved or whether it has stayed static like the general economy.

With base rate still at 0.50% and LIBOR at around 0.82% the borrowing costs for development projects remain relatively low. Depending on the Loan to Value (LTV) developers can borrow at rates from about 4.50%.

Admittedly, these rates apply to the lucky few that have considerable cash to input for a development deal. More typically CD Property Finance is arranging development funding at around 7% p.a for loans geared as high as 80% of cost. The lenders continue to charge significant fees, however, to boost their earnings on each deal.

For residential property investment loans the finest rate we are seeing for up to 55% LTV deals is around 4.00% p.a. However, LTV's of up to 75% are available for good residential investments. The commercial investment market is more challenging with maximum LTV's at around 65%.

New lenders have continued to emerge. Since the New Year two new authorised banks have been launched, both doing property lending as a major part of their business. Since January, CD Property Finance has had meetings with half a dozen new private funds who have money to lend either on a first or second charge basis for development projects.

To summarise, with the emergence of new lenders we would expect to find a lender for your project, provided the location is suitable and you can demonstrate the necessary expertise.

LENDER UPDATE

For short term borrowings we have a new lender that will provide finance for;

Bridging

Light Refurbishment

Heavy Refurbishment

The terms are amongst the most competitive in the market and can be summarised as:

2% arrangement fee, including broker fee

Interest rates from 0.75% per month for bridging loans and 0.90% per month for refurbishment loans

There is no exit fee and legal and valuation fees are low.

LTV range from 60% for heavy refurbishment projects to 75% for bridging finance

This product would suit:

Investors buying at auction and needing to carry out a basic refurbishment or conversion to the property

Developers acquiring larger properties which need major works. For more information please contact us.