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- Credit Slowdown
Credit Slowdown
Some Private Lenders Are Slowing Down
Private Lenders Recycling Capital Slower Than Usual
We’re starting to see a reduction in new origination appetite from some private lenders. This is due to a slowdown in loan repayment activity combined with a more conservative fundraising environment. Higher interest rates mean borrowers are less motivated to refinance and instead are waiting for their loans to mature which means many private lenders are recycling capital slower than usual and have less liquidity available to deploy. We’ve had a few cases now where we’ve sent a deal out and a good lending relationship has come back and said they like the deal but aren’t in a position right now to fund new loans.
What does this mean? The credit markets overall are contracting, and we should expect the availability of funding to get tighter. There are still a lot of lenders that have liquidity and are active but they’re going to be more choosey and only fund the top quality of loan requests they receive. Marginal deals are not going to get funded today. IE. “I need a land loan for my development project at 90% LTC.” Don’t even bother asking.
As we go further into the year and the impact of the rapid rate increases become more broadly felt across the economy we should expect credit to continue to contract. So, if you have a good deal that needs financing we should start working on it sooner rather than later.
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P.S. If you're brand new to the EN Capital newsletter; each week we promote a new capital source for a variety of commercial real estate properties. So if the above lender is not relative to you, the chances are high that we'll have the perfect capital source for you soon.P.P.S. EN Capital is a commercial real estate mortgage brokerage shop. We are not direct lenders. Seriously, every time we do a blast some guy responds and gets pissy when he realizes we're brokers. It's on the top of our website, LinkedIn, clear in all our marketing. We honestly don't know how to make it more obvious. Don't be that guy.P.P.P.S. If you have a commercial real estate deal, unrelated to the above, that needs capital right now reach out to us and let's chat!
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Nathan WhighamPresidentCA DRE Broker License: 01793655EN Capital Contact Info:www.encapital.com[email protected]Direct Line: 310-465-9253
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