But it's not business as usual, bankers and developers said Monday, with the latter noting that some prospective tenants in big projects are in pause mode as they take a wait-and-see attitude amid the turmoil.
Gone are the easy days when borrowers didn't need to show a strong credit history to obtain a conventional mortgage. Lenders are also refusing to grant stated-income loans, which allowed borrowers to exaggerate their earnings without having to provide proof.
"The spigot is not turned off, but is there the same amount of money out there? Absolutely not. For folks who cannot document their incomes or have credit issues, it's definitely a lot more challenging," said Branden Hansen, senior vice president of residential lending at Bank of Utah.
Yet the landscape for loans apparently is not dreadful. Utah banks are not laden with subprime loans made to risky borrowers that dragged down the likes of Washington Mutual and Wachovia, whose assets have been acquired by other institutions in the past week. On top of that, investors are moving money from the stock market into FDIC-insured banks, supplying them with cash to make loans.
"While this isn't the best time in banking, Utah banks are well capitalized and positioned in terms of deposits to continue to provide for the needs of Utah residents," said George Hofmann of Zions Bank. "For a standard business that is looking for [loans to finance] equipment leasing, inventory and expansion, our customers should be well taken care of."
That view appears to be widespread among Utah lenders, though they add the caveat that interest rates probably will rise. Hofmann expects rates for commercial, consumer and home-equity loans to increase a half a percent to potentially 2 percent.
Mortgage rates will increase, too, but by how much is uncertain. Despite the exit of Washington Mutual, the nation's largest savings and loan, last week and the acquisition of Wachovia's bank operations by Citigroup on Monday, there will be plenty of competition among lenders for customers, bankers said.
"My hunch is as a consumer and as someone working in a bank, yes, they will go up. But at what point they'll go up and how long I don't know," said Jill Taylor of KeyBank of Utah.
Bankers said real estate is one sector where loans are becoming harder to get. With foreclosures up and a glut of unsold new homes on the market, it's tougher to meet the requirements of lenders for real estate loans, they said.
"We used to require [a down payment of] 15 percent. We now require 20 percent to 25 percent," said Ron Schulthies, Bank of Utah's chief lending officer.
On the commercial front, two big commercial real estate projects in Salt Lake City - City Creek and Trolley Square - haven't been derailed. But as they create retail spaces or renovate older ones, the question is how to fill that space with new tenants.
City Creek, the billion-dollar open air mall, office and residential development in downtown Salt Lake City, is still on track for completion in spring 2012. That date is far enough away that the retail developer, Taubman Centers Inc., has not had problems with tenants backing out or in recruiting, said Bruce Heckman, vice president of development.
"We have not had any impacts," he said, but added that given the state of the U.S. economy, "there are some uncharted waters for sure."
Trolley Square owner ScanlanKemperBard Cos. of Portland, Ore., is finding retailers cautious given the economic uncertainties and tight credit markets. The company also is waiting to see how the mall project turns out, said Tom Bard, a principal in the company.
"Turmoil in the capital market has caused everybody to pause," he said.
Others in the development community speculate that the rebuilding of Cottonwood Mall, now a huge expanse of idle, open land, save for Macy's, might be impacted by tenants who will have financing problems of their own. Cottonwood developer General Growth Properties had no immediate comment Monday.
Banks are becoming more exacting in another way. KeyBank's Taylor said her company no longer wants to lend money to anyone who comes through the door. Instead, KeyBank wants customers who also have checking, savings or investment accounts.
"We want to deploy our assets in the most responsible way possible and give that [lending] benefit to those who have a full relationship with us."
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* TOM HARVEY contributed to this report
