Buoyed by low interest rates and increasingly favorable market conditions, banks are expanding their lending footprint into commercial real estate and construction.
Data from financial information company Sageworks indcates that net charge-offs for commercial real estate loans were 0.16% of average loan balances in the most recent quarter, reports Forbes. That represents a decrease from the end of 2009 and 13 basis points drop off from June 2013 quarter rates. Loss rates were also down for construction and land development from 3.58 percent of average loan balances at the end of 2009 to 0.24 percent in the most recent quarter of 2014.
Sageworks analyst Regan Camp also noted expanded enthusiasm in the sector.
“The good news is that as more banks move back into real estate lending, it will present more options for borrowers.”