In 2011, the European credit market will be limited against the backdrop of economic fear

24.03.2011 19:19
In 2011, the European credit market will be limited against the backdrop of economic fear According to a report of a new investment company CB Richard Ellis (CBRE), the European market real estate loans continue to decline throughout 2011. Lenders will be even more careful when choosing clients, which will contribute to both long and short-term factors.

In the long term, the available credit will be limited to changes in regulation. Thus, the lenders under the new regulation Basel III (for all companies, except for insurance) increase the amount of capital they must keep the balance. In the short-term loan volume will be even more limited due to the withdrawal of some lenders from the market. For example, since the downturn began nearly 40 lenders have left the UK market, and, judging by recent statements of the leading creditors, a situation unlikely to change in the near future.

During 2010 on the European credit market were marked by significant changes in mood. Here are three key phases. At the beginning of the year on the market have seen a significant softening credit conditions - the volume of credit increased, and increased the ratio in percentage between the principal amount of the loan and the appraised value of the asset. In the second phase by late spring, the European markets have become separated due to the growing crisis of government debt. For example, in Spain, where, because of the public debt and economic risks have increased significantly, lending conditions considerably "sunk", even for premium assets. During the summer, the maximum limit of loans declined from 50 million euros to 35 million euros and the margin increased to 275 basis points. On the other hand, the major Western European markets - especially in Germany and France - the bank's competition has grown, and the lenders are fighting for the right to finance the purchase of premium assets, which led to a further easing of credit conditions.

Over the last months of 2010 were marked by other changes. Lending declined in all regions, both in terms of the number of active lenders and terms of credit conditions. This is clearly evident in all countries where the conditions to the offer more stringent, and in particular the recent increase in margin requirements. This is evident even in Britain, where these requirements have begun to soften in mid-2009.

Natal Dzhostra (Natale Giostra), head of credit consulting in the UK and Europe, the Middle East and Africa CBRE Real Estate Finance, commented: "Care of creditors or of international business, or from the real estate industry continues to affect the market. Given the huge debt refinancing in Europe, more than 500 billion euros over the next three years can hardly be expected surge in new credit activity in the short term. All attention will be focused on addressing long-standing problems. As interest rates rise, we expect that European lenders in 2011 will be even more selective. Conditions become tougher, and this will considerably increase margin requirements. "

Uillfort Curtis (Curtis Willeford), consultant of the Division of Investment Services CB Richard Ellis, Russia, added: "Restrictions on the amount of loans issued and the entry into force of a new model of regulation of the banking and financial markets, Basel III (the minimum capital adequacy ratio will be increased) in the euro area will certainly in the future affect the existing foreign financing in Russia. It can be assumed that the situation in the market of foreign lending in Russia will not improve before 2013-2014. As mentioned earlier, is currently funding is issued for specific high-end projects, such as white space, Ducat III, both local and international banks. All credit sharpened for a particular project. "
Major credit conditions *: Forex Futures assets and the tenants, December 2010

Market

Max. loan size

Max. percentage ratio between the principal amount of the loan and the estimated asset value (LTV)

Margin *

France

?75million

65%

150 bps

Germany

?100million

75%

120 bps

Netherlands

?70million

70%

150 bps

Spain

?35million

65%

275-300 bps

United Kingdom

?60million

70%

210 bps

Trends in European markets

? / ?

? / ?

? / ?

* The maximum size of the new five-year loan to a lender
** margin in excess of rates euribor / libor
Content tags: Mortgages
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