In our May 12 post, we noted that demand for bridge loans, which are typically used for short-term specialized funding purposes, had eased up a bit this past first quarter. We decided to see if that general trend holds for product types on Scotsman Guide Loan Post. The graph below shows the percent share for four different commercial loan products — fixed-rate (broken out between “10-year or greater” and “less than 10-year”), adjustable-rate and interest-only mortgages — on Loan Post for the past 17 quarters.
In this past first quarter, interest-only loans had the largest decline, dropping from 15 percent in fourth-quarter 2010 to 11 percent. Fixed-rate loans with terms of less than 10 years and adjustable-rate mortgages (ARMs), however, each increased 1 percent to 16 percent and 11 percent, respectively. Fixed-rate loans with less than 10-year terms hit a high of 18 percent in third-quarter 2010 and remained the most sought after product on Loan Post during the most recent quarter. Overall, the drop in demand for bridge loans and interest-only loans, combined with the increase in more traditional fixed-rate products, suggests that property owners have had less of a need for short-term emergency funding and affordability products — and that implies that the commercial real estate markets could be stabilizing.