Apartment lending remains one particular of the bright spots within the commercial mortgage business enterprise and borrowers can nevertheless count on lengthy term, fixed rate financing, high leverage loans and low rates.
For instance, we are nevertheless seeing 30 to 35 year fixed rate financing, although 5 and 10 year fixed is additional widely used with borrowers. Amortization schedules remain at 30 to 35 years with some government backed programs. As far as leverage, borrower can nevertheless get 80% financing on purchases (85% on loan request over $three,000,000) and 75% on cash out refinances. Rates are strong as effectively with most in the 6% - 6.25% range(2/10/09) although for larger loans rates in the 5%s are on the market.
Apartment Lending, Multifamily LendingWhat the negative news? Conventional financing is restricted and multifamily lending is getting additional conservative from a international point of view. Historically multifamily underwriting has been focused just about exclusively on the topic property. Now, apartment lending is becoming additional like usually commercial mortgages, where the entire borrowers economic scenario is scrutinized.
Meaning the borrowers individual requirements will be examined, other corporations will sometimes be looked at, and so forth to make positive that the borrower cash flows overall. (Maintain in thoughts although that some programs, where loan amounts are over $three,000,000 the borrower personally is nevertheless not looked at.) This international underwriting is sometimes cumbersome for borrowers that are not use to it, but this is just the new reality and borrowers will have to be prepared to play ball if they want to get their multifamily property financed.
All in all, despite the recent changes, apartment lending remains one particular of the most viable sectors of the business enterprise. Most importantly, the liquidity is nevertheless there with terms that nevertheless make sense for borrowers. Borrowers ought to be ready to supply additional documentation than they are use to, but compared to other sectors where financing is all but gone, it looks certainly good quality.
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