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Banks Lend Aggressively On CRE Despite Downturn Fears

  • April 19, 2017
  • Capital Markets
  • 0 Comments

Banks are aggressively lending on commercial properties even as CRE developers and equity investors are starting to pull back amid fears of a downturn.

“It’s tougher right now,” Craig Bender of ING Group’s U.S. real estate lending arm told the Wall Street Journal. “The banks are hungry. The life insurance companies are hungry.”

Total U.S. commercial real estate lending volume decreased slightly to $491 billion in 2016 — down 3 percent from 2015, according to the Mortgage Bankers Association. But that’s mostly because there are fewer acquisitions to finance as investors become more cautious.

Banks, in contrast, are in many cases still bullish. Wells Fargo, for example, plans to lend around the same volume in 2017 as it did in 2016 ($30 billion).

Still, the head of Wells Fargo commercial real estate, Mark Myers,  said “The bank is more cautious than a year ago.”

Lending bulls point to the loan delinquency rate, which is at the lowest level in more than a decade. A mere 0.59 percent of loans held by banks and thrift associations were delinquent for more than 90 days according to the MBA, compared to 4.21 percent in 2010.

 

Source: The Real Deal