Commercial Real Estate Loan – State of the Market

Who would have thought 2022 that the commercial real estate loans market would be as sputtering in the year 2022? CBMS lenders have taken some beatings, and the banks in the corner are on their way to a revival. For years, bank employees who could not beat conduit loans due to higher interest rates, shorter amortization times, and shorter fixed terms should be giggling quietly, thanking themselves.

A lot of these banks have not joined the trend of loosening the underwriting standards or launching new loan plans that are more aggressive. They kept to the basics and remained prudent. If the residential real estate mortgage didn’t meet their standards, they voted to reject it. These smaller banks or regional ones have cash in abundance and can savor the deals they’d like to, on their conditions. Most of the time, borrowers have to comply with their demands since all the other options are gone, or they can’t have the commercial property loans funded.

I talked to an executive vice president who modestly claimed that “nothing really has changed here, or default rates are still low and showing no signs of increasing, and our funding percentages haven’t been altered.” To him, all the talk about the so-called credit crisis seems exaggerated.

While the other industry members laughed at these tiny banks, they are now forced to return to them to obtain loans. We are not the only ones. Working with the bank with the corner is not an easy task. They have committees (that appear to meet only once per month) and their “one step at a time process,” Generally, they are not a good choice for commercial mortgage brokers. However, they do have the money to lend, and I think we’ll all have to adjust.

Jeff Rauth is President of Commercial Finance Advisors, Inc, located in Birmingham, Michigan. He also has a store of commercial mortgage brokers—contracts, spreadsheets, books, etc. Start at $4.95! Check out commercial real estate loans.