Large national banks were the Manhattan’s luxury condo market biggest lenders over the past year, according to an analysis of purchases between July 2014 and June 2015 by The Real Deal. Emigrant, the New York area-focused bank controlled by the Milstein family, also made the list, as did banks with strong ties to China.
JPMorganChase topped the charts, lending $135.5 million in 23 transactions in the period. Bank of America came next, with $118.7 million loaned in 18 transactions, followed by Citibank, with $102.3 million in 20 transactions.
TRD analyzed the 166 loans made on condo units sold for $5 million or more in buildings with 11 units or more in Manhattan, for the 12-month period ending June 30, as disclosed in city property records.
Consolidation brought on by the financial crisis has helped the big banks become even more dominant, experts said. JPMorgan boosted its lending position through the acquisition of Washington Mutual and Bear Stearns, according to Sam Garcia, publisher of MortgageDaily.com. Bank of America acquired Countrywide, formerly the biggest lender. Citibank solidified its position as a large mortgage lender prior to the financial crisis. Wells Fargo has always maintained a focus on the mortgage business and acquired Wachovia during the crisis.
“It’s a very lucrative and safe bet,” said Warburg Realty broker Jason Haber. “[Condo] pricing has gone in one direction over the last couple of years.”
JP Morgan stressed its advantage was speed. “By helping customers in this market get prequalified, and [through] other measures, our bankers are able to steer them through the home buying-process quickly,” said Kerry Dawson, a senior lending manager at the bank.
A spokesperson for Citi said the bank has a “strong commitment to residential real estate lending” in Manhattan.
Bob Donovan, who runs the home loans division for Bank of America in New York, said the bank likes “the mortgage business and certainly the jumbo mortgage business.”
“We like the return on investment, we like the risk factors,” he added.
Gateway to China
Industry observers found the lower half of the ranking more interesting. Many of the banks that made the cut, such as China CITIC Bank International, Cathay Bank, and HSBC Bank USA, aren’t even among the top 40 mortgage lenders nationwide, according to Guy Cecala, publisher of Inside Mortgage Finance.
Alan Rosenbaum, CEO of mortgage brokerage Guardhill Financial, said many of the Asian banks were leveraging the “relationships that they have established back in China.”
HSBC is a multinational British bank with origins in Hong Kong and Shanghai.
Cathay Bank, founded in 1962, originally catered to Chinese-Americans in Los Angeles and has representative offices in Hong Kong, Shanghai, and Taipei, according to its website. It made the ranking thanks to just two loans, both on units at One57.
China CITIC Bank International is the Hong Kong-based subsidiary of CITIC Group, a financial conglomerate controlled by the Chinese government. Like Cathay, it made the ranking based on two loans at One57.
Private banks betting on the wealthy
“Big retail lenders are pulling back from lending to ordinary homebuyers and going after the wealthy customer who can park a lot of deposits with them,” said Rosenbaum. “The lenders want to get these high-net-worth individuals to invest with their wealth management divisions.”
First Republic Bank, for example, caters to high-net-worth individuals, as does Morgan Stanley Private Bank.
Compass’ Leonard Steinberg said that most of his luxury buyers did all-cash deals, which is why he found the percentage of luxury condos purchased with a mortgage, 46 percent, surprising.
“Loans to wealthier people are lower risk, though no one likes to say that,” he said. “When rates are so low, even wealthy people take advantage of them.”