Builders and developers are seeing an easing in required credit conditions for acquisition, development, and single-family construction loans, but should expect interest rates to rise.
The standards have been consistent easing for a while, but have been easing less in recent months than they were a year ago. According to the NAHB’s Eye on Housing blog, this slow down reflects a decreased availability of loans for residential production overall.
The same NAHB data shows that the majority of AD&C loans are tied to the prime rate. Given that prime interest rates are tied closely to the federal funds rate, the prime interest rate on loans is expected to rise as the Federal Reserve raises its rate in the coming months.
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