In the fourth quarter of 2023, lending for new senior living projects saw limited activity due to broader macroeconomic factors influencing lending decisions. Permanent financing for senior housing and nursing care remained inconsistent across various lending categories, facing challenges such as stricter standards and lower loan proceeds.
Despite these hurdles, there was a rise in approved loan underwriting applications in the last quarter of the year. This indicates ongoing interest in lending to the senior housing and nursing care sectors, with lenders adapting their strategies to navigate current market conditions.
A recent report by NIC, involving 17 lenders, revealed a total loan volume of over $560 million for senior living transactions. Delinquent loan balances decreased by 13% from the previous quarter, with delinquencies as a percentage of total loans dropping by 4.4% in 3Q23.
Mini-perm and bridge debt issuances for senior housing have increased, as well as new construction loan closings, although still below historical levels. Total loan balances for senior housing saw a decline quarter-by-quarter due to various factors, including market conditions and lender caution.
The report also highlights the U.S. Federal Reserve’s stance on future interest rate cuts, noting a balance in line with employment and inflation goals. The Federal Reserve recently maintained that rate cuts would not be considered until inflation approaches 2%.
Although market expectations suggest a potential rate cut by late 2024 or early 2025, the Federal Reserve’s current stance indicates a steady approach to monetary policy in the near term.
