The value of commercial property loans in breach of their agreed terms more than trebled in six months as rapidly falling real estate prices hit a heavily leveraged sector struggling under almost £208bn of debt.

With more than £76bn of debt needing to be refinanced before the end of 2010 and increasing numbers of loans slipping into default, an influential survey of property lending will today add to warnings that commercial property could be a time bomb for banks that supported the real estate boom.

The value of total debt secured by commercial property rose slightly to £207.9bn in the six months to July 2008, according to De Montfort University, the smallest half-year increase ever recorded by the survey at 3%.

About three-quarters of new loans were undertaken by just 12 organisations, according to the survey, which covers about 95% of the lending sector.

Financial Times