Property development finance under siege

Mortgage Introducer was contacted by an anonymous source, claiming the lender had pulled out of the sector after its exposure in the recent Thamesmead mortgage fraud investigation, as well as the continued concern over new build property valuations.

However, Julie Gaskin, corporate relations manager at GMAC-RFC, insisted it was not exiting the market but admitted it had stepped back to reassess its position.

“We have not closed it but we are being prudent with all our lending in these difficult times. Therefore, we are taking a step back and reviewing where we are going. We are keeping an eye on the market and we remain committed to it but we are just not promoting the business as much.”

In a separate move, GMAC-RFC announced it was capping its new build loan-to-values at 75 per cent across its entire Partners range.

Pierre Williams, head of communications at Instant Access Group, said that all providers would need to evaluate their lending practices due to the increase in mixed use developments.

“The returns in commercial development have been falling for a while but this has increased interest in residential developments. It may be a situation that GMAC-RFC needs to rebalance the two areas but the difference between them is becoming blurred because of the increased emphasis on mixed usage developments. This will be an increasingly important area for all lenders going forward.”

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