Loan Services - Choice New York

By Thomas Sussewell

This article provides some insight into the current lending market for multifamily buildings which have successful and stable operations. Choice NY provides a full range of multifamily loan brokerage services for co-op, condominium, and rental buildings. There has been change in the loan market since the pandemic began.

For the most part, banks continue to lend to multifamily buildings. A few banks have limited their lending to existing clients with a substantial relationship. But this is a small minority. With many lenders in the market, borrowers benefit from the healthy competition.

The majority of banks are still actively lending and offering a wide range of loan products. The same wide range of terms offered, such as 5, 7, 10 or even 15 year loan terms still exists. There are also a range of self-liquidating and balloon loans with amortization schedules as long as 40 years. Numerous other terms are still provided and offer borrowers flexibility in structuring the ideal loan that fits their needs.

Also on the positive side, interest rates are near historic lows. Mortgage rates have hit new record lows a dozen times this year. Interest rates are commonly quoted at just over 3% for fixed rate ten-year multifamily loans. Most forecasts project that rates will remain low through the beginning of the new year. It seems unlikely the Federal Reserve will raise rates in the immediate future.

Despite this good news, the pandemic has introduced new challenges to lending. Lenders are now more cautious and scrutinize borrowers more rigorously. Buildings with issues that leave them on the margins of meeting acceptable lending criteria (like high vacancies, high arrears, open violations, and low owner occupancy) may see delays or other complications in closing their loans.

In addition, some lenders have required greater reserve requirements post-closing. Meaning some banks are imposing higher minimum account balances from borrowers.

Both the greater scrutiny and higher minimum account balance requirements better protect the banks.

But the bottom line and main take away is this. It is a great time to secure a new loan for most multifamily buildings with successful and stable operations. Most banks are still lending, offering a wide range of loan products, and with rates near historic lows. Closing on a loan might be more challenging for buildings on the margin with issues and post-closing minimum account balance requirements may be more onerous with some banks.

I encourage buildings to seek professional guidance to help them find the best loan and navigate through the process.