Figures released by the Mortgage Bankers Association show that the total value of commercial mortgages in the first quarter of 2018 rose by 1% compared to the same period in 2017.
The vice president of the Mortgage Bankers Association, Jamie Woodwell, sees the 1% increases as insignificant, He said:
“Looking ahead at the year as a whole, 2017 was a record year for commercial and multifamily mortgage banker originations, at £530 billion of total loans closed. We are anticipating that 2018 is going to be another strong year, just not quite as strong as 2017.”
Some sectors are doing better than others. There has been a rise in mortgages for houses of multiple occupancy (HMO) but demand for mortgages for retail property has decreased by about 27%.
Some investors have taken out fixed rate mortgages prompted by the expectation of an interest rate rise later in 2018.
The Mortgage Bankers Association also reported that there are record low rates of borrowers defaulting on mortgage payments. Commercial mortgages charge around 3.1% interest. If the Bank of England raises its interest rate this will probably mean that commercial mortgage interest rates will rise, but probably by less than 1%.
Corporate and individual tax has decreased, though buy to let landlords are facing higher tax bills due to the reduction in commercial mortgage interest payments tax relief. Many buy to let landlords have formed limited companies in order to reduce their tax bill.