More than 50 new entrants entered the lending market over the last 12 months, according to Savills, taking the list of organisations with ambitions to lend to more than 200 names.
Savills said 52 new entrants was an unprecedented number in over 20 years of market observation.
Savills announced at its 26th annual financing property presentations that 63% of the 104 new entrants over the last two years fall into the ‘other lenders’ category signalling a substantial presence from non-banks.
But Savills research shows that there is a significant imbalance between market opportunities for lending, which currently stand at £40bn, compared to lender ambitions of £75bn.
The increased competition to lend has driven interest rate margins down and LTV ratios up and the spread of lending ambitions becoming wider in terms of geography, risk and sector.
Savills said that strong demand from investors in commercial real estate has continued to drive capital into alternative markets in search of securing returns, especially in the secondary arena.
William Newsom, senior director at Savills, said: “We have already seen the lending landscape change with the pick-up in demand resulting in a reclassification of the property finance market.
“What previously was prime, secondary and tertiary is now core (highly competitive and includes prime, good secondary and ‘rising stars’), non-core (which is less competitive and includes the more specialist and alternative property types noted above) and ‘terminal decline’.
“Obviously, the lending margins will reflect the increased risk from what was previously prime but we are certainly not seeing any signs of reckless lending with loan to values remaining vastly lower than since these records began.”