At PB Financial Group Corp., our biggest challenge is tied to increasing interest rates. We believe that when rates increase it will result in cap rates increasing as well. However, the market has been saturated with cheap capital for the past seven-plus years and therefore we see a plateau forming in 2018 and 2019.
In 2018 we plan on expanding our second mortgage loan production on commercial and multifamily properties as we see a lot of borrowers that have taken advantage of historically low rates and their desire to maintain low-rate first mortgages that they have already obtained. As landlords and property owners need cash we believe that demands for second mortgages will increase.
In addition, we see the need for purchase-money loans (or loans issued by the seller) pickup as investors try to capitalize on low rates while they are available. Therefore, offering bridge loans for the acquisition of distressed properties is another way that we can help investors.