Commercial Loans are generating a little more interest with the banks. According to the national business and commercial manager at Loan Market, stricter commercial lending policies introduced during the global financial crisis, were starting to ease, generating renewed interest in commercial mortgages and a revival in commercial loan inquiries.
Mr Abate said Loan Market has had 400% more commercial loan inquiries in June 2010 as compared to June 2009.
Banks are still being quite careful with loan approvals, but they will lend to the right type of client with a strong application.
Banks do look for borrowers in a strong financial position and properties that have a healthy growth potential. Loan market has seen a range of application for loans to purchase offices, retail premises as well as industrial properties.
Borrowers are finally recognizing the advantages of commercial property over residential property in terms of investment
Commercial property can often offer much better returns for investors than residential property and the tenants are usually on long term leases of three years or more. In fact new tenants often take up 5-year terms.
The rental yields can start at around 4-5%t, which is the top mark for residential and can go up to 7-8%. With commercial investment tenants pay most of the outgoings, therefore holding on to a commercial property can be significantly cheaper than a residential investment.