While a ten year term wasn’t standard even before rate hikes, it’s disappeared completely in the last six months. This squeezes a lot of the more marginal projects that needed a long term to make the math work re: payments and debt service coverage.
Lenders haven’t necessarily turned against CRE – 30% report a bigger loan book than pre-COVID. But they are being much more careful about terms and customers than they were 18 month ago. Fewer report being open to new clients (previously that was always 100% of lenders) and most now want a max term of three years at most.
Is this the ”new normal” or just a temporary pause due to recession fears and uncertainty about the Bank of Canada’s approach? I welcome your thoughts as always.