As the recovery continues for commercial real estate, conduit lenders are opening the taps—tempting borrowers with risky levels of leverage, according to Moody’s Investors Service.
“As the lending market continues to ramp up, competition among issuers will lead to a further decline in credit underwriting standards,” according to Moody’s “US CMBS 2013 Outlook: Credit Quality of New Loans to Slip But Not to Peak Levels.”
You might not feel like you’re getting high-leverage loan offers from conduit lenders, but Moody’s loan-to-value measure considers capitalization rates through market cycles, taking into account the recent run-up in commercial property values compared to income from those properties.
Read more...More Leverage for Conduit Loans, Says Moody's
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