Bank survey finds strong borrower demand and tighter credit standards. (Commercial).
More than 85 percent of banks represented in the survey foresee their 2003 commercial real estate loan volume equal to or greater than their 2002 volume, and most of them are selectively building out-standings. Growth in commercial mortgage portfolios in 2003 is projected despite tightening credit standards reported over the past 120 days, with just more than half (51 percent) of the banks reporting "somewhat tighter" underwriting and 37 percent reporting unchanged standards.
Borrower demand also remains reasonably strong, according to the bankers surveyed. Almost 75 percent described borrower demand for commercial real estate loans as either "somewhat strong" or "moderate." With interest rates at historical lows, 83 percent of bankers surveyed reported "very strong" or "somewhat strong" borrower demand for long-term, fixed-rate financing. Borrower demand for short-term floating rate debt seemed to ebb, with 63 percent of respondents reporting "moderate" or "somewhat strong" interest.
Fully two-thirds of bankers surveyed expect commercial real estate overall performance to remain strong over the next 12 months, reflecting moderate delinquency levels and limited foreclosures. However, opinions about sector performance varied. Multifamily property performance was projected as the strongest sector by 84 percent of respondents, with low to moderate delinquencies anticipated. Office, retail and warehouse/industrial property performance should remain reasonably strong, approximately 90 percent of bankers observed, although they anticipate higher rates of delinquencies and foreclosures than in the multifamily sector. Finally, lodging continues to be viewed as the most vulnerable property sector, with more than 8o percent of bankers surveyed expecting weak performance to continue through 2003.
The complete results of the survey can be found at www.bridgerfunding.com.
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|Date:||May 1, 2003|
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