Lenders Tighten CRE Borrowing Standards

Bank and CMBS loan originators tightened their lending standards for all types of commercial real estate loans during the first quarter, a marked reversal from the previous few years.

A significant number of U.S. banks reported tightening standards for construction and land development loans and loans secured by multifamily properties, according to the latest Federal Reserve Senior Loan Officer Opinion Survey released this week. Additionally, a moderate number of U.S. banks reported tightening standards for loans secured by office, industrial, retail and hotel properties.

While lenders were tightening their underwriting standards, demands for all three types of CRE loans continued to grow.

In particular, the Fed’s survey of senior loan officers found a moderate net fraction of U.S. banks reported increasing maximum loan size but tightening of their loan-to-value ratios. Another modest net fraction reported tightening debt-service coverage ratios. Survey respondents indicated that other loan terms remained basically unchanged, on net, over the past year.

View entire article at CoStar.com


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