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Fed survey finds loan standards increasing

On Behalf of | Aug 7, 2017 | Uncategorized

A Federal Reserve survey released on July 31 found that banks were tightening standards related to commercial lending. This may impact Missouri investors looking to buy multifamily properties or those who are looking to buy or develop land. However, business loan terms were largely unchanged in the past quarter. The Fed has placed a greater emphasis on commercial lending in its recent bank stress tests.

Stress tests are conducted to determine if banks are able to handle economic downturns or other financial uncertainties. According to the Fed, further price increases in the commercial real estate sector could make a future recession or downturn more severe. The survey also found that demand for both commercial and business loans were down in the second quarter. In addition, demand was down for both auto and credit card loans.

While commercial real estate may be worth investing in, there is no guarantee that an investor or developer will see a return on his or her investment. It may be worthwhile to consult with an attorney prior to agreeing to any deal to buy commercial buildings or land. This may increase the odds of avoiding problems with the property itself or with any title that may already exist. An attorney may also be able to help find an accountant or other professionals to review the deal as well.

If there is an issue with a purchase contract or any other part of a commercial real estate deal, an attorney may help to resolve the issue. The same may be true in the event that an issue arises after the deal is completed. Ultimately, this may allow anyone associated with commercial real estate endeavors to spend more time finding ways to make profitable deals instead of dealing with legal issues.