Interest rates still enabling robust borrowing business

Real Estate Weekly, Jan 12, 2005 by Sheldon Gartenstein

Cooperatives refinancing debt in the low interest rate environment of the last three years dominated the lending market.

The refinancing funded existing mortgages, while new financings covered the cost of capital improvement needs. With interest rates continuing to remain at the lowest levels in 40 years, many market watchers expect 2005 to be another year with very active origination volume.

While interest rates are beginning to inch up, property values in the New York area are appreciating at a much faster pace.

This allows cooperatives to meet capital improvement needs through cash-out borrowing, while maintaining low debt-to-equity ratios.

To secure the most favorable rates and terms, boards need a financial partner who can process loan requests quickly. Lenders specializing in cooperative financing are the natural choice to achieve this goal. When time is of the essence, these expert lenders can expedite the process to closing. They understand both the real estate market and the special needs of the cooperative corporation.

In one recent example, the board of an Upper East Side cooperative approached NCB, through its subsidiary NCB, FSB, the week before Thanksgiving seeking a $9 million first mortgage loan.

They wanted to both lock in favorable rates and to close by December 31, 2004. NCB was able to deliver on both requirements. A commitment was issued to the board on November 23, 2004 and the loan closed December 28, 2004.

This fast-track processing enabled the cooperative to lower its debt service, increase its funding for capital improvements, and close on a loan in the 2004 tax year.

Forecasts for 2005 predict cooperative boards will continue the search for favorable financing opportunities and the right financial partner in order to readily achieve and meet all fiscal goals.