Commercial Lending Markets Maintain Strong Pace
- Lending activity remained strong in Q4. The CBRE Lending Momentum Index closed at a value of 263 (2005 = 100) in December, just shy of September’s 264. Compared with a year ago, the index was up 4.2%.
- After loosening in Q3, loan underwriting became slightly more conservative in Q4, marked by higher debt service coverage and lower LTV ratios. The percentage of loans carrying either partial or full interest-only terms fell to 64.1% in Q4 from a high of 67.9% in Q3.
- Capital markets continued to support strong commercial lending activity in Q4. The Fed lowered short-term interest rates to a target range of 1.5% to 1.75% and adopted a “wait-and-see” approach to future rate policy changes.