Britain is at risk of a mass sell-off of distressed properties that would send values into a double dip and impair the lending ability of banks.
In the report, the Bank revealed its concerns about potential writedowns on £200bn of loans made to commercial property by major UK banks. It warned of an increasing number of loan defaults given the 44pc fall in the value of shops, offices and warehouses since 2007.
However, the Bank also described how the approach of the lenders to withdrawing from the property sector could jeopardise the economy's recovery. Their exposures are almost six times greater than in the 1990s recession.
Lenders may be forced into selling a wave of properties as the stock of repossessed assets grows, according to the Bank. This could disrupt the supply-and-demand balance and place "significant downward pressure" on recovering property values.
"That would reduce banks' recovery rates and could potentially prompt other banks to sell their assets, leading to further falls in property values," the Bank says in the report.
More
here.
In the report, the Bank revealed its concerns about potential writedowns on £200bn of loans made to commercial property by major UK banks. It warned of an increasing number of loan defaults given the 44pc fall in the value of shops, offices and warehouses since 2007.
However, the Bank also described how the approach of the lenders to withdrawing from the property sector could jeopardise the economy's recovery. Their exposures are almost six times greater than in the 1990s recession.
Lenders may be forced into selling a wave of properties as the stock of repossessed assets grows, according to the Bank. This could disrupt the supply-and-demand balance and place "significant downward pressure" on recovering property values.
"That would reduce banks' recovery rates and could potentially prompt other banks to sell their assets, leading to further falls in property values," the Bank says in the report.
More
here.
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