By Jim Costello on September 30th, 2019
Competition in the U.S. commercial mortgage market is fierce. With the debt funds taking on more risk, there is evidence that other lenders are beginning to ease on standards to win business.
The move is slight, but the distribution of LTVs for all lenders excluding the debt funds has increased. Commercial mortgages originated by these traditional lenders had an average LTV of 64% in the first half of 2019, up from 62% a year ago.
A 200 bps increase is not much and 64% still represents a conservative LTV ratio. However, the skew to higher LTV loans in 2019 is a sign of competitive pressure. In the first half of this year, 40% of all commercial mortgages had an LTV of 70% or greater vs. only a third of loans originated in 2018.
This article first appeared in US Capital Trends, published September 25. To learn more about RCA’s suite of global publications and how to subscribe, contact us.
Also on RCA Insights: