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Banks could be slipping into old bad habits. Last year, as interest rates fell, banks started to loosen underwriting standards reminiscent of the last cycle—the kinds of missteps that ultimately led to the great recession. This includes high loan-to-value ratios as well as skipping essential steps, like income verification.

“The banks are starting to get a little bit scary. You are starting to see the behavior that you saw in 2006 and 2007 again,” Steve Jacobs, CEO of Ten-X Commercial, tells GlobeSt.com. “I don’t think this is a mainstream trend, but it is something that I have noticed and something that surprised me. This pushes buyer activity and it compresses cap rates and pushes pricing up. It means a buyer will pay a 3-cap for a property when it really should be a 4-cap. That is when it gets dangerous.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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