Banks plan more commercial lending – Miami Real Estate
A 2012 survey of banking trends by financial services consultants Omega Performance found that nearly 61% of US banks plan to do more commercial lending this year, and nearly 13% said they plan to do considerably more commercial lending.
Moreover, the survey found that nearly 20% of banks planned to slightly ease their lending standards for consumer and commercial loans, while 15% planned to tighten standards slightly. Most said their standards would remain the same.
This sounds encouraging and promising for a more active 2012 in commercial real estate lending.
On the positive side, most US banks surveyed said they plan to do more commercial lending this year. On the flip side, economic growth has slowed in some sectors, real estate loan delinquencies remain high, and many lenders are still tightening loan underwriting standards.
But overall, we notice a welcome trend in an industry that was severely hit and it is in a desperate need for recovery.
The outlook also seems promising for small businesses. The Omega survey found that nearly 13% of US banks said their small business lending would increase drastically in 2012, while nearly 64% said it would increase slowly.
We already know that banks are seating on great liquidity. The only missing ingredient in the mix is the eagerness to go out and engage the borrower market again. Fortunately, the need to produce earnings and fees is being slowly awakened by market dynamics, albeit not perfect.
A report by financial advisory firm Deloitte LLC noted that commercial real estate is benefiting from favorable fundamentals and absorption dynamics, with record-low construction activity driving better rent and vacancy trends, particularly in the apartment and lodging sectors.
Paradoxically, at the same time banks are more opened to the idea of becoming more aggressive, they are, at the same time, moving away from the reckless and irresponsible behavior of the wild and crazy boom days. They are being very selective as to what they are financing and very careful as to due-diligence.
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