Requests for acquisition loans have risen sharply as investment in the UK regions soars, according to the latest Laxfield Capital Debt Barometer.
Purchase lending has risen from just 12% of the market in 2012, when many investors were principally seeking finance to deal with legacy loans, to 60.3% in the six months to the end of September.
The barometer also found requests for finance in the UK regions outstripped London by both volume and count for the first time this cycle.
Some 56% of requests by volume were for regional deals in the third quarter, according to Laxfield.
Demand for development loans also grew, with 30 requests seen by Laxfield over the six months, totalling £1.3bn of debt needed. Residential development took 45.5% of the market, with mixed-use sites requiring 23.3%. Retail development requirements were so small they did not register on Laxfield’s survey.
In total, the market lent more than £11bn over the period across a total of 154 deals as activity picked up after the election.
Gearing within all deals spiked in the second quarter of 2015, up to 63.5% on average, but settled to consistent levels across all deals over the full six months as third-quarter average gearing dipped to 56.4%.
The price of each loan has risen over the six months to around 225bps over LIBOR for the weighted average loan at 65% LTV.
Loan terms remained static, however, with 82% of the market still seeking a five-year loan term.
Alternatives lost their lustre slightly for investors over the six months compared with the previous period but remained 40% of loan requests by volume.
