The Tamesis
According to the agency, half of non-bank art lenders will default on their loans by 2024, up from 17% two years ago. Arts and Finance Report 2025published by Deloitte Private and ArtTactic.
However, the numbers are still better than in 2020, the first year of the pandemic, when two-thirds of lenders faced defaults as the art market came to a virtual standstill.
Harry Smith, executive chairman of art valuers Gurr Johns, puts it bluntly financial times: “The market is divided into the best and the rest. It’s okay to lend to the best – to lend to the rest? Absolutely not.” His company, which uses art worth up to $5 billion a year as collateral for loans, will also close its micro-lending business.
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While major auctions in New York performed strongly last fall, the broader art market has been shrinking since 2022, hit by falling demand from high-spending buyers in Asia and general economic uncertainty. Sales will fall 12% to $57.5 billion in 2024, according to Art Basel and UBS. As a result, the value of the art used as collateral fell, forcing lenders to either issue margin calls or put the loans into default.
Nonetheless, the art mortgage loan market is reportedly growing. Deloitte and ArtTactic estimate it will be worth between $33.9 billion and $40 billion by 2025, up nearly 12% from the last estimate in 2023. The companies predict that it could be worth $50.1 billion by 2027. Adam Chinn, who launched International Art Finance two years ago with funding and support from Nahmad family members, told reporters. art news Last year, his company was on track to secure a $500 million loan by the end of 2025.
However, none of the 65 private banks surveyed experienced a single default in 2024. This may be because they can restructure their clients’ finances to avoid default.
Rebecca Fine, chief executive of Athena Art Finance, explains that the rise of non-bank lenders has led to a resurgence in the loan-to-own business. These lenders are not worried about maintaining loan performance—they are focused on ultimately controlling the borrower’s art at a discount. This means they often take on higher-risk clients. Fine said that despite this trend, Athena is not seeing more defaults.
The report found that lenders typically look for art worth $200,000 to $250,000 or more and prefer to spread their bets across multiple artists. They also tend to favor big-name artists in Impressionist and Modern art over emerging artists with no auction records.
The report’s sample size includes 21 art lenders, 65 private banks and 37 private offices, as well as 231 art professionals and 119 art collectors. The investigation also found that some asset-based lenders charge interest rates in excess of 15 per cent, a rate that private banks do not touch. Half of these loans have interest rates between 10% and 15%, while the rest have interest rates below 6%.
As Gerjohns’ Smith says: Banks can offer competitive rates, while specialist lenders have to charge higher fees. “The higher the interest rate, the lower the quality of the borrowers,” he said.
