UK banks are stalling their lending activities in commercial real estate as the pandemic has steamrolled the economy. Another reason for stalling lending on that front is due to rising fears in defaults. It is reported that new loans declined by 34 percent in the first half of the year from a decline of $20.2 billion in the previous year.
The data was published by The Business School in London. The study had surveyed more than a fifth of lenders in the country. These lenders said that new commercial property loans were not provided in that period.
Nicole Lux, senior research fellow at The Business School and author of the report said in a statement, “The short-term effects of the coronavirus pandemic have only just become visible, but the long-term effects will impact lending and banking into next year and beyond.”
The samples included in the study are banks, building societies, insurers and other types of lenders. Last week, it was reported that the UK banks are planning to increase their cost of credit card borrowing and also plan to impose a limit on loan products soon. These loan products will be restricted in the fourth quarter of the year in addition to loan access.
The move is attributed to maintaining stability while the second wave of coronavirus is taking place in the country. Now banks are taking necessary steps to provide cushion effect to ease the financial stock as a result of the pandemic. In fact, several lenders have also reduced deposit mortgages on offer since the lockdown.