The Problem With DSCR and LTV in Lending
South State Correspondent
FEBRUARY 28, 2023
Many community banks today are willing to underwrite real estate secured loans on just two metrics: debt-service-coverage ratio (DSCR) and loan-to-appraised value (LTV). The average cap rate from 1993 to the present is 6.79%, and the high is 11.27%. Cap rates started to increase with the increase of the benchmark 10-year Treasury rate.
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