It is the reason why the U.K. banking sector still has £243 billion ($391.69 billion) worth of outstanding U.K. commercial real-estate loans, mostly backing low-quality "secondary" property, and more than half of it maturing in the next three years. Provided borrowers could still pay interest, banks were happy to extend loans, postponing major write-downs.
But rolling may no longer be such an attractive option.
This reminds me of the debacle that actually occured in the us, when the banks started to pull their mortgage products, and people who had been relying on refinancing balloon payment, interest only loans, were caught out, because the mortgage products they expected to be there were gone, and they could not afford to pay for the house they had purchased.
Jobs became scarce, house prices plummeted, and one could see that it would be difficult to sell their homes in a market that was falling.
One property investment advisor said that one of her mortgage friends had eight mortgage products available him to present to clients, his company pulled all but two of them, he was left holding the baby, and so were his homeowners.
Who knows what willl happen in the UK.
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