US commercial real estate lending markets expanded in Q3 this year as capital markets remained favourable to borrowers despite the observed uncertainty of global economy in Q1 2016 due to Britain’s late-June vote to exit the European Union (EU), as reported by CBRE Group.
Since investors moved into treasuries and other debt instruments after Brexit, the US capital market is considered as safe haven to invest.
CBRE Lending Momentum Index – tracking the pace of US commercial loan closings – has shown some positivity with 4.3 per cent which indicates the gradual recovery in loan closings since March. This increased lending momentum index is encouraging especially amidst uncertain capital markets and the direction of US interest rates.
Even life companies have seen a surge of 15 per cent in a lending volume approaching the top spot among non-agency commercial/multifamily lenders. Bank lending accounted for 31 per cent of lending volume in this quarter, which is lesser than 40 per cent plus market shares captured over the past several quarters. The main reason for this fall is the pressurized atmosphere created by regulators to tighten underwriting standards especially for construction and multifamily loans.
“Most capital sources have been expanding, despite signs that banks are becoming more conservative in their underwriting,” says Brian Stoffers, Global President, Debt & Structured Finance, CBRE Capital Markets. “Now that the election is over, investors are likely to focus on the Federal Reserve’s December policy meeting. It appears that markets are anticipating a greater likelihood of a short-term rate increase.”
Source: Realty Plus