Bank and Nonbank Lenders and the Commercial Mortgage Market

Brent Ambrose, John D Benjamin and Peter Chinloy

The Journal of Real Estate Finance and Economics, 2003, vol. 26, issue 1, 94 pages

Abstract: This paper develops an equilibrium model of the commercial mortgage market that includes the sequence from commitment to origination and allows testing for differences by type of lender. From borrowers, loan demand is based on the income yield, capital gains, and expectations about return distributions. Lenders use prices such as mortgage rates and their distributions, and quantities in underwriting standards. There are separate equilibria in the markets for loan commitments and originations. Bank and nonbank lenders are not restricted to the same lending technology, nor to the weights placed on mortgage rates as opposed to underwriting standards. Empirical results for the United States commercial mortgage market indicate that banks use interest rates in allocating credit while nonbanks rely on underwriting standards, notably the loan-to-value ratio. A consequence is that nonbanks have a clientele incentive towards making low cap rate loans compensated by low loan-to-value ratios. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://journals.kluweronline.com/issn/0895-5638/contents link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:26:y:2003:i:1:p:81-94

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11146/PS2

Access Statistics for this article

The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

More articles in The Journal of Real Estate Finance and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().