Commercial First Mort- gages has suspended new lending after falling victim to a banking crisis it says was un-thinkable just months ago.
The firm says its attempts to find fresh funding have failed, despite it being one of the UK’s top commercial lenders.
The company’s management is now in consultation with staff and is also considering avenues to allow it to re-turn to the market.
Stephen Johnson, sales and marketing director at Commercial First, says: “It’s clear the credit market has failed. We have a business that made a profit of £13m last year and will make more than £20m this year.
“We have a balance sheet of £1.6bn in performing mortgage assets at an average LTV of 68% and a margin of 4%, yet we are unable to get funding.”
Johnson adds that an offer for the business was received recently.
He says: “But events in the wider market including the collapse of Bear Stearns meant the offer and additional funding were withdrawn. “As a result of this we had no alternative but to suspend originations.”
He adds: ”Our team is currently in dialogue with funding partners to work through possible sol-utions for our pipe-line business.”
Keith Heron, chairman of Commercial Funding Partners, says: “The funding market is changing every day and Commercial First’s withdrawal, albeit temporary, is evidence that the crunch has turned into a crisis.”
Adam Tyler, chief executive of the National Association of Commercial Finance Brokers, says: “Since Commercial First is such a large lender, a big concern for the association is what effect this move will have on members’ pipeline business.
“This was also a concern for Commercial First, which approached the NACFB immediately for help so that its business could be redirected to alternative sources with the minimum of delay and inconvenience.”