Boy, what a week! If you were watching the stock market last week, you were in for a wild ride. How does this type of market affect commercial property loans? The market was extremely volatile, moving up and down with daily triple digits. This is a major change from almost the entire last quarter of 2009 when the market was mostly moving sideways and up slowly.
The word for what happened last week is called volatility! Some investors like these types of markets if they can guess correctly, but the majority of investors don’t know what to do. Buy-Sell-Hold-Help?
How does this affect the Commercial Property Loan for the small investor and business owner? It’s not a positive. The investors don’t know what to do, so they sit on the sidelines. When investors sit on the sidelines there is less money to lend. They start looking for safe havens for their funds and right now, many investors are still pretty scared of the mortgage market.
Residential foreclosures are on the rise again. Job losses are still increasing. Job creation is at a standstill. Many of the economic indicators are confusing. One is good, the next is bad next is good and so on.
When one looks quickly,commercial property loans the one semi-bright spot from last week was the enormous profits generated by some of the banks. When you look at them more closely, however, the banks that showed the profits were the banks that bet heavily in the market with their trading desks. It wasn’t the banks that make their money the old-fashioned way, through lending to commercial and residential customers.
Do we see any major changes coming down the road? The Obama administration is talking tough again with the bankers, but with the way the lobbyists spend money, who knows if Congress will take any action? England went through something similar several years ago when they deregulated the banks. They have since changed their banking system back to the old-fashioned way. Lending money to make money. Not taking huge risks in the market to make money with their customer’s money, who don’t get to share in the profits. Is it good for banks to be “Too Big To Fail?” I don’t know, but something has to change for the consumer, the small business owner and the commercial property loan.