RCA in the News

Lending for Commercial Property Falls as Investors Pull Back

The Wall Street Journal / April 11th, 2017

The Wall Street Journal reports: Commercial real estate lending by banks, insurance companies and other financial institutions is declining as sales activity slows and regulators voice concern about the sector.

Lenders closed roughly $491 billion of mortgage loans in 2016, down 3% from 2015, according to new statistics from the Mortgage Bankers Association. Most of the decline occurred in the fourth quarter, when volume was 7% lower than the same quarter in 2015, according to Jamie Woodwell, the trade group’s head of commercial property research.

Despite the decrease, the new volume number was the third highest since the association began doing the survey, behind 2015 and the record year of 2007.

The decline between 2015 and 2016 was due partly to a slowing of property sales, meaning fewer buyers needed financing. “There’s a very tight correlation” between the two, Mr. Woodwell said.

Buyers, for their part, are getting jittery because values have been rising for eight years and are near record highs. In all, investors purchased $493.7 billion worth of U.S. commercial property in 2016, down 10% from 2015, according to data firm Real Capital Analytics.

View the full article in The Wall Street Journal: Lending for Commercial Property Falls as Investors Pull Back