Banks tightened lending standards for commercial real estate loans in Q4, the Federal Reserve’s latest Senior Loan Officer Opinion Survey found.
Moderate net fractions of banks reported tightening standards on loans for multifamily and for construction and land development purposes.
A significant net fraction of banks reported weaker demand for construction and land development loans, while a modest net share reported weaker demand for multifamily loans.
The CBRE Lending Momentum Index, which tracks the pace of commercial loan closings in the U.S., rose 13.6% in Q4 2018.
Banks accounted for more than 38% of non-agency lending volume in Q4, the index found. Alternative lenders, including REITs, finance companies and debt funds, accounted for 25% and life insurance companies for 23%. CMBS conduit originators accounted for 13.4%.
Over last year as a whole , commercial property prices increased 6.2%, and the value of properties sold at or above $2.5 million jumped 15% to a near record $562.1 billion last year, the Wall Street Journal reported this week.
Commercial real estate participants seem to be of two minds when it comes to 2019, writes CrediFi CEO Ely Razin.
“Many (at least those that play in the dominant multifamily sector) seem to remain bullish,” he says, while the rest believe 2019 will be more challenging than recent years. “Prudence and careful strategizing are becoming more the name of the game for some. Others are expecting a market hiccup or even full-blown pullback.”
Fannie Mae lifted its limit on small mortgage loans to $6 million, from $3 million or less nationwide and $5 million or less in high-cost markets.
“Increasing the loan limit for our small mortgage loan program will provide more capital and liquidity to the small loan marketplace and help address the significant affordable workforce housing supply issues,” said Michael Winters, Fannie’s Vice President Multifamily Customer Management.
In another blow to retail, Charlotte Russe filed a Chapter 11 petition and announced plans to close about 20% of its 500 shops.
CNN reported that the mall-based operator of clothing stores for tweens and young women indicated in its court filing that it “suffered from a dramatic decrease in sales and in-store traffic” and struggled with “the burden of maintaining a large brick-and-mortar presence.”
While retailers continue to shutter stores and file for bankruptcy, at BB&T Bank the retail lending trend has been an upwards one. View the BB&T retail lending report.