For investors in New York who are interested in owning properties, there’s good news. Banks recently eased their standards for loans for commercial real estate. This is the first time they have done this in nearly three years.
During the past year, banks have specifically eased essential lending terms. These include the maximum size of a commercial real estate loan as well as loan rates spread over their fund costs. This has taken place for all three categories of commercial property loans: multifamily, nonfarm nonresidential and land development loans. The reason for the sudden change? Banks have reported more stiff competition from both banks and nonbank lenders.
Meanwhile, for consumers, the standards for mortgage loans essentially remained unchanged. On the contrary, standards for credit card and auto loans tightened slightly. Weak demand was found for the majority of household loan categories. So far, the change in commercial lending standards does not appear to have affected the financial markets in a drastic way.
The loosening commercial real estate loan requirements may certainly be a cause for celebration for those wanting to jump into the world of commercial properties. However, obtaining lending for a desired property is only part of the process of sealing the deal. Commercial real estate deals are complicated, with many moving parts, and neglecting just one may cost an investor financially or even cause his or her deal to fall through altogether. Fortunately, an attorney can provide the guidance needed to navigate these deals and complete them successfully in New York.
Source: marketwatch.com, “U.S. banks loosened commercial real estate lending standards for first time in 3 years: Fed“, Greg Robb, May 8, 2018