Lending Environment Shows Promise for Borrowers, According to CBRE


A just released survey from real estate services firm CBRE shows overall lending environment has improved over the past year. CBRE’s Lending Momentum Index, which tracks loans originated or brokered by CBRE Capital Markets, came in at 237 for full-year 2017, showing growth of 14.5 percent compared to the year prior.

The Lending Momentum Index for the fourth quarter of 2017 came to 224, down slightly from 226 in the third quarter.

Loan terms, however, became more favorable to borrowers during the last three months of 2017, with the average loan-to-value (LTV) ratio rising 280 basis points from the third to the fourth quarter, to 68.1 percent. The average debt service coverage ratio declined from 1.53 to 1.49. The percentage of either full or partial interest-only loans originated during the period increased, to 66.0 percent from 57.8 percent in the third quarter.

CBRE estimates that approximately 65 percent of loans originated in the fourth quarter carried an interest rate between 4.0 percent and 5.0 percent, compared to 61 percent of loans originated during the quarter prior.

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