Falling property values and credit ratings
There has been the first decline in commercial property values for London properties in over 2 years. West end properties have continued to increase in value but other parts of London have experienced a small decrease in property values.
Concerns for another recession are being blamed for this, following further declines in retail sales combined with depressing economical forecasts, the continuing euro crisis, rising unemployment and high inflation figures. Worth mentioning is that inflation figures have recently fallen, so some positive news!
This will obviously be of some concern to the many specialist bridging finance lenders who specialise in providing bridging loans secured on property in London. However, this is very unlikely to have any effect on the lending criteria for bridging loans at this time.
Over in Europe the credit rating agency Standard and Poor’s have recently downgraded 10 Spanish banks with warnings that they could downgrade their credit worthiness even further. In addition another credit ratings agency, Fitch, believes that solving the crisis in the Eurozone is now probably ‘beyond reach’.
Due to growing concerns over the Euro crisis the UK Government’s Foreign and Commonwealth Office are drawing up plans about how they would deal with a banking system crash in Spain and Portugal. There are close to 1 million British people living in Spain and approximately 50 thousand living in Portugal.
The Foreign Office is concerned that major banking problems in either of these two countries could leave Britons homeless as mortgages and loans are called in, and without any money to get back to the UK as banks could limit cash withdrawls. This could lead to thousands of British people being stranded at ports and airports, unable to get home because they may have lost all their money or just been unable to withdraw any of their money.
The banks in Spain and Portugal do operate a similar scheme to British banks in which deposits up to 100 thousand euros are guaranteed, but in the event of major banking problems being able to obtain or claim this money may take a while, leaving people without any money to buy food and other essentials.
Consequently the UK Foreign Office are working on plans about how they would evacuate such large numbers of Britons should the need arise.