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Half the non-bank businesses lending money against artworks experienced defaults on their loans in 2024, up from just 17 per cent two years ago, according to new research.
This was still an improvement on 2020, the first year of Covid-19, when two-thirds of lenders had defaults as the art market ground to a halt, the Deloitte Private and ArtTactic Art and Finance Report 2025 found.
Harry Smith, executive chair of art valuers Gurr Johns, said: “The traditional markets are split between the best and the rest. Lending on the best is fine — lending on the rest is absolutely not fine.”
Gurr Johns, which annually values $4bn to $5bn of artwork being used as collateral, is winding up its small lending business.
The art market has been contracting since 2022 as falling demand from high-spending Asian bidders and economic uncertainty hit sales. The market shrank 12 per cent to $57.5bn in 2024, according to a report by Art Basel and UBS.
The value of artworks pledged against loans has also thus been dragged down, prompting art lenders to issue margin calls or, increasingly, put the loans into default.
The Deloitte Private and ArtTactic Art report estimated the size of the art-backed loan market at $33.9bn-$40bn in 2025, up almost 12 per cent on its previous estimate. It projected that the total loan portfolio would rise to $42bn-$50.1bn in 2027.
The results were much better for private banks that were making loans, according to the report, with none of those surveyed suffering any defaults in 2024. Banks are recourse lenders and can rearrange a client’s affairs with them to avoid a default.
Rebecca Fine, chief executive of asset-backed lender Athena Art Finance, said: “With the proliferation of non-bank art lenders over the past years, several of the loan-to-own art lending businesses have returned.”
“Loan-to-own” refers to a lender whose primary goal is not to have a performing loan book but to take control of the borrower’s art at a discount through a default. This meant they tended not to mind less creditworthy borrowers, industry experts said.
Fine said Athena Art Finance had not had an increase in defaults.
Lenders generally seek pieces worth more than $200,000 to $250,000 and by more than one artist to avoid concentration risk. They tend to prefer Impressionist and Modern works, spanning Monet to Warhol, over those of emerging artists without a proven auction record.
The report surveyed 17 art-based lenders and six private banks, covering a large part of the market.
The Deloitte Private and ArtTactic report also found that some asset-based lenders were charging more than 15 per cent interest on their loans — a level no private banks reached. Half of their loans were at 10 to 15 per cent, with the remaining under 6 per cent.
Smith said banks were able to offer competitive rates to clients, whereas specialist lenders’ rates had to be “very much higher . . . the higher the rate, the less good the quality of the borrower”.
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