Banks Tightening CRE Lending Standards


CRE Loan Growth Still Strong but Moderates in July as Analysts Sees More “Rationality” Return to the Market

Second quarter bank earnings results and early third quarter lending numbers clearly show U.S.-based banks have tightened their underwriting standards for CRE loans as they face increased scrutiny of their commercial real estate lending from bank examiners.

In fact, loan officers at domestic banks reported that the current standards are tighter now than they have been on average since 2005, according to the latest Senior Loan Officer Opinion Survey from the Federal Reserve.

The tighter underwriting is showing up in shortened interest-only periods and lower loan-to-value (LTV) ratios as well.

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