The 2008 economic downturn was significant and sustained. At the time it was considered appropriate to compare it with the 1929 Wall Street crash. Covid-19 is likely to have a far greater economic impact, share prices have already crashed reflecting market sentiment and uncertainty. Economies across the world are set to shrink. Our Government is taking unprecedented steps to support our economy. Residential property prices have not yet responded, though we are likely to see residential property prices in free-fall, perhaps losing 30% on OMV. This will undoubtedly impact current property development margins, converting profits into losses. The numbers will have to be crunched.

Lenders will take a more conservative view. Banks will be supported by the Bank of England and encouraged to lend in a prudent manner. Non-bank lenders who have overstretched their loan books will focus on collections and recoveries. Other non-bank lenders may see their funding lines withdrawn. Warren Buffett said, “Only when the tide goes out to do you discover who’s been swimming naked”. Well, over the coming months a number of lenders will disappear.

Either way, there will be far fewer funding options available to brokers and developers. Of those that alight unscathed, Greenfield Mortgages have continued to support our brokers and clients in a prudent manner, as such we are well placed for the challenging months ahead and look forward to being there post Covid-19 too.