Half of non-bank art lenders experienced loan defaults in 2024, a sharp increase from just 17 percent two years earlier, according to the Deloitte Private and ArtTactic Art & Finance Report 2025. The figure marks a significant deterioration in the specialist art-finance sector, though it remains below the chaos of 2020, when two-thirds of such lenders faced defaults as the art market all but ground to a halt during the first year of Covid.

The data points to a market that is increasingly dividing between prime collateral and everything else. Harry Smith, executive chair of the art valuation firm Gurr Johns, told the Financial Times that lending remains sound at the top end but has become untenable for weaker material. His firm, which values up to $5 billion of artworks used as loan collateral each year, is closing its own small lending business as a result of that divide.

The broader backdrop is a contracting market. Global art sales have been shrinking since 2022, weighed down by falling demand from high-spending Asian buyers and general economic uncertainty. Sales fell 12 percent to $57.5 billion in 2024, according to figures from Art Basel and UBS. As values dropped, the artworks pledged as collateral lost worth, leaving lenders with the choice of issuing margin calls or allowing loans to default.

The findings come even as the market for art-backed loans continues to grow on paper. Specialists from Gurr Johns to boutique lenders have expanded lending volumes in recent years, and auction houses have pushed further into finance. The report's default figures suggest that growth is now coming with real credit risk, particularly for non-bank lenders that cannot rely on diversified banking balance sheets to absorb losses.

For collectors, the implication is that borrowing against art is getting harder and more expensive outside the biggest banking names. Lenders are likely to tighten loan-to-value ratios and become more selective about collateral, reinforcing the split between blue-chip works that still attract financing and the rest of the market, which is finding credit increasingly scarce.