RCA Insights

Chart: Shifting LTVs of US Lender Groups

By 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.

1909 US LTVs COTW-01

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.  

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Jim Costello

Jim Costello

Senior Vice President

Jim Costello has worked in the CRE space on issues of urban economics since 1990, including a 20-year stint at Torto Wheaton Research. Jim expanded the reach of the Torto Wheaton Research team developing forecasts of global market fundamentals. He also developed approaches to pair the forecast results with frameworks to answer investor questions on asset values and relative investment opportunities.

In the aftermath of the Global Financial Crisis, Jim provided advice to the Treasury Department and helped educate these professionals on commercial real estate performance. Jim is a member of the Commercial Board of Governors of the Mortgage Bankers Administration, where he helps policy makers understand the commercial real estate industry.

Jim is expanding the capabilities of the Real Capital Analytics team on issues of real estate market dynamics. Jim has a master’s degree in economics and is a member of the Counselors of Real Estate.