Commercial Mortgages

All across Canada, small builders and renovation firms have been running into wall of resistance from Canada's major banks when it comes to obtaining construction financing for their various building projects.

With a faltering market in Alberta and a noticeable slowing of purchasing activity in the three most populous provinces, concern amongst conservative mortgage lenders has grown about the potential for oversupply in certain city locales and regions.

Further aggravating the situation is the reduction in available liquidity for construction projects including both small as well as large scale projects.As margins are being squeezed throughout the industry, conservation of capital has become a major topic of the day.The result has seen a dramatic reduction in the capital available for construction financing through traditional lenders, and an increase in the demand for non-bank development and builder's draw mortgages.

Viable projects with well capitalized backers are still able to locate construction financing, albeit with a more thorough search required. It is no doubt that the market will require a consistent period of major economic growth and a finalization of the ongoing Canadian ABCP paper dispute before the liquidity in this area will return.

Whether seeking financing for a single-family home or custom-build project, or locating funds or large-scale construction and development projects, be sure to contact a reputable Commercial Mortgage broker to ensure you have examined all of your available options.

Commercial real estate investment in fell sharply in the first six months of 2008 but the commercial mortgages sector will with stand this little storm nicely.

CB Richard Ellis Ltd. (CBRE) released a report this week outlining the seemingly gloomy numbers in the commercial mortgages and real estate markets. So far this year there has been a 24% drop in investment in office buildings, malls and industrial properties. But there is a silver lining behind these clouds.

On the surface, a drop of that level appears to echo the other negative economic news Canadians have faced recently. If we look a little more closely though, as CBRE has done, we can see that the news isn't all bad. The 24% drop is a comparison to 2007, which was a record year. CBRE predicts overall investment in the commercial real estate market to reach about $20 billion in 2008, significantly less than the $32 billion of last year, but not at all out of line with 2005 and 2006 figures.

The bottom line? The 2007 boom was a blip and lower 2008 figures for commercial mortgages and real estate investment are no cause for alarm.