flexiblefullpage - default
Currently Reading

Builders and Developers Report Worsening Credit Conditions in Q3 2022

Advertisement
billboard - default
Financing

Builders and Developers Report Worsening Credit Conditions in Q3 2022

Credit on loans for Acquisition, Development & Construction (AD&C) was less available and more expensive in the third quarter of the year


November 17, 2022
Construction manager pointing to paperwork. Image covered by diagram with cost and logistics symbols
Image: Stock.adobe.com

During the third quarter of 2022, credit on loans for Acquisition, Development & Construction (AD&C) became more costly and more difficult to obtain, according to NAHB Eye on Housing. Net easing indices from NAHB and the Fed were negative in Q3 2022, indicating tighter credit for builders and developers.

Of all respondents who reported tighter credit conditions, 74% of builders and developers cited lenders who raised the interest rate on AD&C loans, while 60% said lenders reduced the amount they were willing to lend, and 46% encountered lenders who lowered the allowable Loan-to-Value or Loan-to-Cost ratio.

Meanwhile, the average effective rate (based on rate of return to the lender over the assumed life of the loan taking both the contract interest rate and initial fee into account) increased on three of the four categories of loans tracked in the AD&C Survey: from 9.55 to 9.67 percent on loans for land development, from 8.48 to 9.95 percent on loans for speculative single-family construction, and from 8.63 to 10.76 percent on loans for pre-sold single-family construction.

Read more

Advertisement
leaderboard2 - default

Related Stories

Market Data + Trends

January's Mortgage Rate Dip Prompts Some Thawing of the Housing Market

A drop in mortgage rates from recent peaks nudged more homebuyers and sellers into the market, signaling the start of greater supply and demand

Financing

Credit for Builders Still Tight But Shows Some Easing

Credit for residential AD&C remained constrained during Q4 2023, but the good news is that tightening is less widespread than in recent quarters

New-Home Sales

Are We Headed for a Spring Homebuying Slowdown?

As mortgage rates rise to their highest levels in two months, Freddie Mac warns rates may stay higher for longer, which could affect spring buying 

Advertisement
boombox1 -
Advertisement
native1 - default
halfpage2 -

More in Category

Delaware-based Schell Brothers, our 2023 Builder of the Year, brings a refreshing approach to delivering homes and measuring success with an overriding mission of happiness

NAHB Chairman's Message: In a challenging business environment for home builders, and with higher housing costs for families, the National Association of Home Builders is working to help home builders better meet the nation's housing needs

Sure there are challenges, but overall, Pro Builder's annual Housing Forecast Survey finds home builders are optimistic about the coming year

Advertisement
native2 - default
Advertisement
halfpage1 -

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.