The funding gap that previously was identified only in the office sector has now spread to include multifamily properties, according to new estimates by CBRE.
By CBRE's definition, "Funding gaps exist when investors are forced to refinance at a loan-to-value (LTV) ratio lower than the one at which they first borrowed, or when the value has fallen since the loan was originated." The LTV ratio, in turn, is used by lenders to compare the amount of a mortgage with the appraised value of the property when they decide whether to issue a loan.
In June this year, CBRE evaluated loans originated from 2018 to 2020 and uncovered a funding gap of $72.7 billion in the office sector for loans maturing through 2025. By October, just four months later, that gap had grown to $82.9 billion.
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