Commercial property financing: lenders radiating good vibes
Sentiment among lenders on the commercial real estate financing market in Germany is improving again. The score of the FAP Barometer is now at 1.84 points, or 31 basis points above that of the year’s opening quarter.
Meanwhile, the number of panel participants who voiced the opinion that the terms of financing had become more progressive since last quarter has climbed to an all-time high: Nearly 60% believe that conditions improved between the first and second quarter of the year, and not a single survey respondent considers market conditions more restrictive.
That being said, the pace of the lenders’ new business has been slower than the bright spirits among the respondents would suggest. Only 15% of them stated their new business showed a continued increase, whereas 34% of the lenders had said as much during the first quarter. 21.7% reported a recent increase in new business (previous quarter: 20.8%). The number of experts who diagnosed a declining (17%) or stagnant (46%) new business segment has increased.
In real estate portfolio financing, the LTV bandwidth extends from 55 to 90%, the benchmark being at 71%. The spreads extend from 70 to 600 basis points, the median equalling 181 bp, down from 203 bp the previous quarter.
In project development financing, the LTC bandwidth extends from 50 to 100%, with the benchmark at 73%. Spreads went as high as 325 basis points during Q2. The benchmark in the bottom range has remained stable at 123 bp, while the one in the medium range equals 198.
