The following is a summary of an article published on CNBC.com:
- With help from a government loan program for small businesses, small businesses are buying their own office space.
- The amount of small businesses loans under this program rose at an annual rate of 16 percent in the three years after the end of the recession in 2009 to $4.45 billion, according to the Small Business Administration.
- Commercial real estate prices are down 30 percent from the peak nationally.
- Government-backed loans allow business owners to put up a down payment of just 10 percent, compared with the 25 percent to 40 percent demanded in a commercial property loan.
- The qualification for SBA loans generally require that the business have less than $5 million in income and fewer than 500 employees.
- The loans are typically for 20 years — compared with the standard 30 years for most fixed-rate home loans — and come with interest rates that are slightly below market rates.
- Commercial property prices have become very attractive, says Walter Page, a director of research at PPR, a division of CoStar Group, a commercial real estate data company.
- “There is an abnormal amount of opportunity now — if people want to buy, or fix and renovate, now is the time,” Page says.
See full article here.
By Ruth Mantell
WASHINGTON (MarketWatch) – Mortgage rates hit record lows in the week ending June 7, with the 30-year fixed-rate mortgage average declining to 3.67% from 3.75% in the prior week, Freddie Mac said Thursday in its weekly report. These data go back to 1971. The rate was 4.49% a year earlier. To obtain the latest 30-year rate, payment of an average 0.7 point was required, according to Freddie, a buyer of residential mortgages. “Fixed mortgage rates reached new record lows for the sixth consecutive week as long-term Treasury bond yields declined further following downwardly revised economic growth and job creation data,” said Frank Nothaft, Freddie Mac’s chief economist. The 15-year fixed-rate mortgage also hit a record low in the most recent week, falling to 2.94% from 2.97% in the prior week. These data go back to 1991. Meanwhile, the average rate on the 5-year Treasury-indexed hybrid adjustable-rate mortgage remained at 2.84%. The 1-year Treasury-indexed ARM rose to 2.79% from 2.75%.
Source via HAR
Below is a synopsis of this article by Mark Heschmeyer of CoStar
Five Years After the Onset of the Great Recession, Banks Are Ready To Venture Back in to Commercial Real Estate
- For the first time in five years, a majority of banks are finally talking about their ability to grow their loan portfolios.
- Up until the fourth quarter of 2011, non-performing commercial mortgage and construction loans were still increasing notably. And indeed, for many banks, they are still going up, but at moderating rates. So there is still a note of caution from bankers.
- “Because the financial condition of many of our borrowers has suffered over the last several years, we expect to continue to see downgrades within the portfolio into an extended recovery as a play,” said Daryl D. Moore, executive vice president and chief credit officer of Old National Bancorp. “This will be especially true in the commercial real estate portfolio where capital and liquidity continued to be an issue for many of our clients.”
- Some banks are still being aggressive in charging off some loans, particularly construction loans, and are trying to sell off their foreclosed real estate inventory and nonperforming loans as best as they can.
- However, in the Federal Reserve Board’s latest Senior Loan Officer Opinion Survey issued this week, U.S. bank loan officers reported that demand for CRE loans had strengthened, on net, over the past three months. In addition, during the past 12 months, on net, domestic banks reportedly eased maximum CRE loan sizes and many domestic banks trimmed loan rate spreads.
- “Through 2011 obviously we’ve all been very cautious in that sector due to some of the challenges that have been experienced,” said Claude Davis, president and CEO of First Financial Bancorp. “Where we’ve seen our new opportunities are really with those investors who have weathered the storm well, had the liquidity and the cash and the capacity to kind of grow and expand if you will, kind of win assets at a cheaper level. And so we’ve actually seen the quality be very good from our perspective in that book.”
- Banks are still staying away from the high risk areas like residential development.
- Philip Flynn, president and CEO of Associated Banc-Corp., said, “We continue to see opportunities for growth and expansion in CRE lending because of the retrenchment of other competitors and other sources of capital.
- While it is apparent that the growth in commercial real estate lending will be limited and cautious, the timing for an improved lending environment couldn’t be better for some investors who financed at the peak of the market five years ago. As mortgage production ramps up, investors will see banks being more competitive on pricing.
- The bad news is that, initially, it will be the well heeled who stand to benefit first and financing terms are likely to be fairly tight. Banks will also use the opportunity to restructure the makeup of their portfolios – weeding out the less creditworthy.
- At CVB Financial Corp., Christopher D. Myers, its president and CEO, said most of the deals his bank is doing are pricing in the 4.5% to 5.25% range — unless the bank does an interest rate swap. Then typically the bank is pricing CRE loans somewhere around 3% on a variable rate.
- In general, bank executives said they would be targeting the strongest growth in particular assets and markets. Multifamily was most frequently mentioned as a targeted asset category as were some select middle-market industry segments such as, restaurants, health care and energy.
- By market area, Bank of the Ozarks Inc.’s George Gleason, chairman and CEO, said, “I think the largest part of [our] growth is going to come from our Texas offices. The second largest part of that growth I would expect to come from our metro Little Rock, [AR], area offices and the third largest part of growth I would expect to come from our metro Charlotte [NC] office.”
- In the last quarter Bank of the Ozark’s Texas office had accounted for 41.8% of its total loan portfolio.