Commercial Real Estate Financing Update
-
by admin
- March 21, 2016
- Market Monitor, What We're Reading
- 0
The mortgage banking community recently gathered in Orlando to discuss the state of the commercial real estate industry, and the tone of the meeting this year was upbeat yet cautious. While lender allocations are generally higher for 2016, the mortgage-backed securities market faces some significant headwinds.
Life Insurance Companies
Life insurance lenders are fat and happy. Life company portfolios have been performing extremely well and the returns on CRE mortgages are well above the returns they can get by investing in corporate bonds. These balance sheet lenders originated an estimated $50 billion in loans in 2015 and the expectations are for an increase of 10-20% for 2016. They remain quite prudent in their underwriting however, with 75% LTV and 30-year amortization limited to apartment loans only and on their internal cap rates. Middle-of-the-road, 10-year fixed rates today are approximately 4.25%…
