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Commercial mortgages market awaiting return of liquidity

Those looking for an improvement in the commercial mortgages market may have to wait until the London Interbank Offered Rate (Libor) stabilises, according to one expert.Jonathan Moore, head of marketing at Mortgages for Business, is of the view that commercial mortgages will remain expensive until Libor drops.He commented: "It depends on the wider economic conditions. If Libor comes down and they get liquidity back into the mortgage market then things will improve. How long it will be is like saying: 'How long is a piece of string' at the moment unfortunately."On May 23rd of this year, the Libor rate stood at six per cent, compared to the current interest rate of five per cent.Research from Fitch found that if the average-weighted UK commercial property yield increased from the 5.45 per cent reported by the Investment Property Databank's to 8.4 per cent, around nine per cent of all commercial mortgage-backed securities bonds rated BBB or above would be at risk of default.

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