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Why are rates so high for private money loans?

Rates are relatively high for private money lending right now because lending standards for real estate loans from the banks are so tight (many would argue, overly tight) that there is a huge gap in the market. Until just a few years ago, there were many alternatives to for a borrower who was turned away by the banks. Essentially all those sources have dried up with the financial meltdown. Wall Street traders saw the huge profits to be made trading mortgage backed securities and gradually watered down all the sensible lending guidelines that had been developed over the years and essentially poisoned the well for any alternative lending products. Now, loans that would have been easily funded a few years ago have no takers among traditional lenders.  A borrower with good equity in a property and a good exit strategy has to turn the private market to obtain financing and pay the going rate.