Real Estate Financing May See Rays of Hope

 

Net tightening for commercial real estate loans fell from a peak of 87 percent in the October 2008 survey to 13 percent in the current survey.
Courtesy of Realty in Idaho

A pivotal question remains: Are lenders beginning to consider lending to real estate a good proposition once again? As more and more home buyers secure loans, they’ll be able to afford exterior improvements, which can be done by landscape architects and landscape contractors.

The Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices at Selected Large Banks released in April suggested there is light at the end of the tunnel. The latest survey showed that only 2 percent of the banks were tightening on prime mortgage lending, down from a peak of 74 percent in the July 2008 survey, and 5 percent were tightening on non-traditional (Alt-A) mortgages, compared to a peak of 90 percent in the October 2008 survey.

Interest rates for conventional 30-year fixed rate mortgages continued to hover in the 5 percent range, where they have been for most of the year. Most recently, mortgage rates have been benefiting from the flight to U.S. debt instruments resulting from concerns over Greece and other  countries in the Euro currency union. Further, even with the Federal Reserve no longer purchasing mortgage-backed securities, investor demand for mortgages continues to be strong, keeping rates low.

– Courtesy of NAHB