The Tamesis
According to the Deloitte Private and ArtTactic 2025 Art & Finance Report, half of non-bank art lenders will default on their loans by 2024, up from 17% two years ago.
Still, it’s better than the chaos of 2020, the first year of the pandemic, when the art market came to a virtual standstill and two-thirds of lenders faced defaults.
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 uses art worth up to $5 billion a year as collateral for loans and is even shutting down its micro-lending business.
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Despite strong performances at New York’s major autumn auctions, the broader art market has been shrinking since 2022, hurt by declining demand from high-spending Asian buyers 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.
However, 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. The companies estimate that this number could reach $50.1 billion by 2027. Adam Chinn, who founded International Art Finance two years ago with funding and support from members of the Nahmad family, tells us art news’ Daniel Cassady said last year that his company was on track to secure a $500 million loan by the end of 2025.
Meanwhile, private banks surveyed did not experience a single default in 2024. This is 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 surveyed 17 art lenders and 6 private banks, covering a large portion of the market. 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 Smith puts it: 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.
