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Laxfield: borrowers show higher appetite for leverage

The debt advisor and investment manager saw in 2018 higher requests for loans with LTVs ranging between 65% and 70%, according to its latest UK CRE Debt Barometer.

Borrowers in the UK commercial real estate market requested higher loan-to-value ratios from lenders in 2018, pushing the average requirement to 60 percent LTV compared with 55.8 percent five years ago, Laxfield Capital’s latest UK CRE Debt Barometer report shows.

In 2018, 34.9 percent of loan requests were for 65-70 percent LTV, up from 15.5 percent in 2017. Many higher-leverage requests for finance involved an element of asset improvement, Laxfield said.

In total, around 18 percent of loan requests were for more than 70 percent LTV. The report said this illustrated that a “reasonable” cohort of borrowers were seeking higher leverage. On the other hand, requests for leverage of 45-55 percent LTV shrunk from 22.8 percent in 2017 to 8.63 percent in 2018.