Pricing lending in the current market: securing the capital — security value sensitivities

Abstract

There is always a danger when writing a paper on the pricing of lending that it will become immediately historic. The market for property finance in the UK is a constantly moving target, probably even considered too erratic by some foreign lenders. However, this is precisely why the UK market is so attractive and, at the end of the day, so liquid. Lending figures are subject to scrutiny, but the most recent Bank of England figures reported some £73bn of debt as at December 2001. This accounted for approximately 9.5 per cent of all reported bank lending in the UK. The issues of capital availability and security values are covered in this paper: these are intrinsically linked and an attempt will be made to cover some of the contemporary micro and macro issues affecting them. Copyright © 2002 Henry Stewart Publications.