The credit crunch continues. Both lenders and borrowers seem to be relatively pessimistic.
Penton Research conducted their seventh annual survey of “Borrower Trends” between Dec 9th, 2009 and January 5th, 2010. There were some surprising – but mostly unsurprising – results. National Real Estate Investor magazine published the results in the January/February 2010 edition.
A Majority of Lenders Think Normal Markets Won’t Return for Another Year and a Half
Lenders and borrowers are pessimistic about 2010 and do not believe the credit crunch will end this year. 58 percent of lenders believe it will take 19 months or more for normal liquidity to return to the capital markets. Both groups are less optimistic than last year. 53 percent of borrowers last year believed credit would improve, but only 34 percent believe so this year.
Lenders who answered the survey say loan-to-value (LTV) ratios have decreased over the past year. They say this is because property values have decreased, and there is an environment of uncertainty. Bankers express fear that the economy will worsen, fear that the loan will not be paid back, or fear of punitive regulatory actions. Lenders admit they are very conservative right now.
Both sides of the table expect that long-term, fixed interest rates will increase over the next year.
Borrowers were asked for the most important factor when choosing a lender today, and the number one answer was certainty of execution. Because there is limited debt capital, borrowers want to be sure funds can be delivered to close deals. Other top factors cited by borrowers were flexibility of loan terms, lower rates and loan-to-value ratios.
Refinancing and Loan Maturity Crisis
40 percent of borrowers said they did no transactions in 2009, while only 24 percent said they had any borrowing activity in 2009. However, more than 40 percent of the respondents tried refinancing (with or without success).
In fact, according to the new 2010 forecast by financial analyst firm Keefe, Bruyette & Woods (KBW), delinquencies from both bank and CMBS loans are expected to increase as maturities come due. “We believe that the behavior of the banks will be driven primarily by their borrowers’ lack of ability to refinance their mortgages in the current environment,” says the report. (National Real Estate Investor. “Banks to Spend 2010 Coping with Commercial Mortgage Maturities”, by S. Fleming. December 2009)
Commercial Affiliates Helps Troubled Borrowers Find Solutions
Commercial Affiliates assists borrowers in this very scenario, and we expect 2010 to be a difficult one for borrowers. We are Debt Restructuring Specialists. We have extensive experience in loan workouts, in acquisition and disposition of properties, and in the analysis of a broad range of property types across the U.S. And we have sources of capital for new financing.
- If you need to restructure your debt, you need our services.
- If you are looking for new sources of capital, you need our services.
- If you are in threat of foreclosure, you need our services.
Contact us now. You will receive information and more than $500.00 in free research with exclusive insights into obtaining a commercial loan modification.
Don’t delay! Call Miles McCabe at 1-503-731-6000.