The annual volume of new lending in the UK is set to rise to £50bn by 2016 – almost double last year’s figure – according to Savills.
At the agent’s annual financing property presentation today it said that the increase in loans from £27.5bn last year and a predicted £35bn in 2012 will be driven by new non-traditional lenders moving into the real estate finance market.
The “huge structural change” in the property finance world in terms of who will be issuing new property loans has been accelerated by regulatory issues facing traditional lenders.
It pointed to banking regulation such as Basel or slotting – the FSA’s impending risk-weighting model – which has opened up opportunities for non-bank lenders.
According to its research, the agent said that insurance companies comprise more than one-third of a current 16 lenders in the market which say they “have the ability” to lend and hold £100m or more.
All but one of these insurers on the 16-strong list below has entered the UK lending market since 2008.
William Newsom, Savills UK head of valuation, said: “Implications facing the UK lending market such as slotting are likely to be the catalyst for the biggest structural change in property lending over the past 20 years.
“The issue of banks having to raise more capital to support existing loan books is affecting their lending ability. However, slotting is likely to increase the sale of loan books, which will have a positive impact on the property market. It will also accelerate the resolution of legacy issues in the banks.”
The firm also predicted that the number of loan book sales would double from £4bn in 2011 to in excess of £8bn in 2012. The firm expected this figure potentially to increase in 2013-14 as the cost of unwinding swaps burns off, and then remain steady over the next three to five years.
Lenders with the ability to issue and hold loans over £100m:
AIG*
Aviva
AXA*
Bank of China*
Barclays Bank
Citigroup
Deka Bank
Deutsche Bank
Deutsche Pfandbriefbank
Helaba
HSBC
Lloyds Banking Group
Legal & General*
M&G Investments*
Met Life*
RBS
* new lender since 2008
