Conventional commercial mortgage lenders are not able to lend
Banks and large institutional lenders have had to withdraw from the market due to the liquidity crisis in collateralized mortgage bond markets. Conventional lenders aren't lending anymore. Lenders who were willing to make good on these deals 12 months ago are refusing to lend. They rely on the secondary capital market. If they don't have enough cash to buy it, they won't be able to lend.
Privately funded commercial mortgage loan applications are on the rise
Private funding sources are being used by commercial real estate investors to obtain the funds they require. Applications are flooding into private equity, hedge funds, and hard money shops. The best commercial loan agent and hard money commercial mortgage lenders have the luxury to choose from so many amazing projects.
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Developers and investors are in desperate need of funding. Those who get loan commitments will have the financial responsibility to repay them. The minimum amount of hard money needed to finance the best deals is 12%, with at least two lender points.
Private, "hard cash" is now the mainstream business. Private funding is now an option for even the most wealthy investors and developers. Private lenders will finance the best deals first with the most qualified borrowers.
Financial capital, like all commodities, is a commodity. The price of financial capital is determined by supply and demand. The demand for private-financed commercial mortgage loans is higher than ever before, so it's no surprise that the price of hard money has gone up.