Commercial Real Estate Loans on the up
Loans to commercial real estate developers are on the up, showing a changing trend in the current US lending market.
Even though it is estimated by Moody’s Investors Service that banks will report losses of up to as much as $150 billion between 2008 and next year, financial institutions are renewing faith in their lending abilities.
Banks are responsible for half of all real estate loans in the commercial sector. Many banks have safeguarded reserves or have amended their portfolios in a bid to restore the balance of figures against their expected losses.
At the Mortgage Bankers Association’s annual conference, 60 banks and independent lenders were subject to a survey regarding their lending capabilities. Jones Lang LaSalle reported that 24 of those surveyed would each record profits of $2-4 billion in commercial real estate loans. The survey reported that 56% of the lenders were willing to lend $50 million to a single property purchase.
The fall in property prices also ensures that in conjunction to this, purchasing trends will turn a corner.
This renewed confidence suggests the lending that ground to an abrupt halt in 2007 is now picking up pace again. Although lenders are not readily backing office buildings, hotels and retail properties at the present time, an increase looks promising.