I just picked up this interesting article on Bloomberg indicating that the freeze in the interbank markets could be thawing.
(click the link above).
I also heard this anecdotally from a treasury market trader, who was indicating that trades for 3 and even 6-month money between lenders were starting to happen. This must reflect that all of the various measures by central bankers and stress testing of banks and institutions has perhaps had the desired effect.
I am by no means calling green shoots but this could mean a gradual return to some degree of loan pricing and loan to values decided on risk rather than ‘take it or leave it’ default minimum terms. In recent months, lenders have been falling back to very conservative loan to value ratios and pricing that was more or less standard irrespective of the kind of risk presented to them. This has been frustrating for clients who are in a position to buy but have found their lenders unwilling to assist them take advantage of some once-in-a-generation opportunities.
It will be interesting to see how long this thawing of the interbank markets takes to filter through to the lending areas of the Banks in our markets. I hope that it is soon so that we can get back to arranging deals where the pricing accurately reflects the detail of the deal.