In the years following the Great Recession, banks represented the lion’s share of construction financing, typically providing loans for near-total construction costs at a relatively cheap rate of 2.5 percent on top of LIBOR. Now, amid changes in regulations, banks have tightened up on leverage — instead of 75 percent to 80 percent, leverage has dropped to about 65 percent — and developers are paying almost twice the previous interest rate due to rising spreads and increase to the LIBOR index.
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