Categorized | Commercial

United States Banks Increase Commercial Property Lending

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For the first time since 2010, banks in the United States increased lending for commercial real estate in the fourth quarter. The increase is attributed to the drop in default rates, as well as the number of foreclosed properties in their inventories.

 

The increase in commercial real estate loans was significant, as the total balance on loans in the commercial property sector rose from three and a half billion dollars to over one trillion dollars. It was the first increase in commercial property lending in six quarters.

 

The default rate and the high number of foreclosed properties initially were the reason as to why commercial property lending continued to fall for an extended period of time. As those two factors improve, commercial lending is expected to continue the strong performance that was seen during the fourth quarter.

 

While economists do give warning that there are still some potential difficulties that exist within the market, the latest figures are a good sign that things are improving.

 

The apartment buildings sector of the commercial real estate market experienced its best performance since the beginning of 2009, as the default rate fell to two and a half percent. Retail and office building properties also experienced a strong quarter.

 

The overall default rate on commercial real estate loans dropped to just under four percent, making it the lowest that has been experienced since the middle of 2009.

 

The latest results certainly make for positive news in the commercial real estate market. Confidence continues to grow in that sector, as many hope the latest figures will improve even more this year.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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