Despite Fears of Overbuilding, Lenders Remain Willing to Fund Multifamily Development

Apartment developers are paying more interest on their construction loans—but that isn’t keeping developers from planning and financing new projects.

Despite rising interest rates and the nagging anxiety that developers are already building too many apartments in some markets, banks remain active lenders for multifamily construction projects.

“There is certainly no shortage of capital,” says Danny Kaufman, managing director in the Chicago office of HFF.

Interest rates rise

Apartment developers are paying more interest on their construction loans—but that isn’t keeping developers from planning and financing new projects.

“People have been predicting rates rising for 10 years—now it is finally happening,” says John Kelly, senior vice president and partner in the Boston office of CBRE. “But the cost of capital has not become an inhibitor of overall development.”

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