Who Is Lending Now?

The apartment lending market in Greater Seattle has been very comfortable for a very long time but it is all changing now. For the past five years, a buyer could choose from three highly competitive lenders, WaMu, World (Wachovia), and Countrywide. They all knew each other’s rates and fees and competed very hard against each other. The loans were cheap and easy. If you were the typical client we deal with at McQuaid Commercial Real Estate then you went to one of these three because anyone else was at least one-half percent higher on the rate with total fees 3X to get the loan.

The lending market is changing and it will affect everyone in the apartment business. We should anticipate much longer processing times and much more expensive loans as the “new” lenders are going to insist on several third party reports that we have not had to supply to the previous three sources. Environmental reports, structural reports, and surveys will be necessary and rates will be higher, meaning loan amounts will be lower as well.

As of today WaMu and Wachovia are still in the market, but Countrywide is not. So each of the remaining two have seen a pretty good increase in their pipeline, so much so that I hear the pipeline may get temporarily closed until the volume gets processed. The next group of lenders is near to having their day I suppose, and the market will have to accept less certain and more cost.