Commercial Mortgage Lenders become more competitive

Commercial mortgage lenders origination in 2010 was up significantly from 2009 despite the national recession that began in the U.S. in late 2007.  Recently commercial mortgage lenders have become more competitive, albeit more conservative than in the go-go days.  Until the real estate finance markets finds its footing, private ‘hard money’ lenders are able to originate an unprecedented volume of creditworthy transactions that the institutional commercial mortgage lenders are uncomfortable with.

Commercial mortgage lenders have come back strong after a few years of dismal loan origination volumes.  As of April 2010 dozens of new commercial mortgage lenders as well as lenders who had been out of the market have come into the capital markets closing deals.  Wall Street CMBS loans have re-emerged.  Many industry participants take this as a bell weather sign that the commercial real estate capital market has healed itself.

An experienced commercial mortgage broker can be utilized by borrowers seeking real estate financing, whether it is land loans, permanent loans, or construction lending.  A strong commercial mortgage broker can help developers, investors, and  borrowers access the commercial real estate finance markets and commercial mortgage lenders.

For competitive commercial real estate loans, its a borrower’s market. Risk based pricing offers fixed rate first mortgages in the 5.25% to 6.5% interest rate range, with equity yields as low as 12%. Some commercial mortgage lenders are making 100% of cost loans in 2010.

Uncertainty and volatility in the commercial real estate capital markets have spooked some commercial mortgage lenders, and we find ourselves shepherding our borrower clients through this credit environment. Maybe we can inspire you with this anecdote: During the financing boom there were 2 low leverage transactions that the staff at Financial Compound could seem to get financed.  For one transaction we spoke to 275 lenders over a period of two years and we could not place the transaction. We have closed both of those transactions since the “credit crunch” began.  Both of these transactions had non traditional tenancy or uses.  As a result these commercial mortgage loans were passed over time and time again.  However, during the credit crunch, the low loan-to-value that these deals enjoyed seemed to make them more attractive to the commercial mortgage lenders.

Financial Compound tries to keep our clients focused on the historically low interest rate they are getting despite the volatility with commercial mortgage lenders today. In many cases once we explained the systemic nature of the volatile market and its effect on many lenders, our clients got more comfortable with the situation.

See also :  Commercial Mortgage Lenders