US banks increase commercial property financing

New York US banks increased financing for commercial real estate in the fourth quarter for the first time in almost two years as default rates dropped and lenders shed more foreclosed properties, Chandan Economics said. Balances on loans for properties, including office buildings and shopping malls, rose by $3.69 billion from the prior three months to $1.06 trillion, after falling for six consecutive quarters, the New York-based real estate researcher said in a report. The last time such lending rose was the first three months of 2010, when balances increased by $101.9 million from the previous quarter, according to the report. Lending has been constrained by upheaval in the market for commercial mortgage-backed securities, the financing engine that drove property deals and prices to record highs in 2007. With loans from the boom years coming due, property owners need to refinance and CMBS volume remains a fraction of what it was at the peak, according to Sam Chandan, chief economist at the firm.