Private wealth management divisions at major banks are creating alternative financing channels for Manhattan’s luxury buyers — transactions that rarely appear in conventional lending data, according to industry veteran Steven Cohen, team leader of The Steven Cohen Team.
Manhattan’s luxury real estate market is undergoing a marked change in how transactions are financed, says Steven Cohen, team leader and associate real estate broker with 26 years of experience in New York City. The change is not just the rise of cash buyers — it’s a wholesale restructuring of how affluent buyers access capital when they do need financing.
“Fifty-four percent of all deals are all cash,” Cohen says, citing a trend that cuts across price points and market segments. In the luxury sector, the share of all-cash deals is even higher. But the story goes beyond headline statistics about cash versus financed purchases. How wealthy buyers who use financing access funds reveals a more profound shift.
According to Cohen, traditional mortgage products are being rapidly replaced by private wealth management solutions operating outside conventional lending channels. Many of his clients, rather than applying for a standard mortgage, work directly with their private bankers at major institutions to secure financing. “I’m seeing more and more of that,” Cohen says.
This means a significant portion of luxury real estate financing does not appear in standard mortgage origination data. When buyers borrow against their investment portfolios or access credit through private banking relationships, these transactions bypass the reporting systems used by analysts and institutional investors. The financing is still happening, but through channels that are harder to track.
Private wealth management loans come with different terms, approval processes, and risk profiles than standard mortgages. The exact appraisal requirements, documentation, or underwriting standards do not bind buyers using these channels. They operate in a parallel financing system with its own rules, making it difficult to accurately measure the scale of luxury market activity using public data.
Cohen’s experience challenges the assumption that rising interest rates are slowing luxury sales. Even as mortgage rates hover near 6 percent — about double the lows seen during the pandemic — Manhattan’s ultra-luxury segment has seen sales jump nearly 58 percent. Cohen attributes this to a wealth effect that outweighs concerns about borrowing costs.
“When buyers see their portfolios performing well, they feel confident and are willing to act boldly in the market,” Cohen says. This is especially true for finance professionals and executives whose compensation is closely tied to market performance. Substantial bonuses and investment gains feed directly into luxury real estate activity.
In this environment, higher rates function more as a psychological filter than a financial barrier. While rates do affect buyer sentiment, Cohen argues that for those whose wealth has grown significantly, confidence in their financial position matters far more than the cost of debt. “It’s psychological. It doesn’t only affect those taking a mortgage,” he says, but the wealth effect is currently overriding rate anxiety among affluent buyers.
For buyers who use financing, Cohen identifies appraisal gaps as a greater source of friction than interest rates. If a property appraises below the contract price, it can create momentary frustration but rarely derails the transaction. Cohen describes a recent sale in which a $5 million apartment was appraised at $4.9 million. The deal still closed with minimal disruption.
These appraisal discrepancies are manageable because buyers in this segment often have enough liquidity to cover the difference or adjust terms without jeopardizing the sale. Cohen notes that he has not encountered banks refusing to fund deals due to minor appraisal shortfalls, suggesting that either appraisals are generally in line or buyers have sufficient flexibility to bridge the gap.
Another factor shaping Manhattan’s luxury market is the prevalence of “shadow inventory”—properties that never reach public listings. Cohen explains that many deals now take place entirely off-market, through broker and developer networks. “If we’re finding it, it’s not on the market, which it very well may not be, because we know of something that’s being sold, or potential sellers who would sell at the right price,” he says.
This off-market activity means that many high-end properties change hands without ever being listed publicly or included in official sales data. When combined with private wealth management financing, it creates a market that is far more opaque than traditional metrics suggest.
The financing trends Cohen describes signal more than a temporary adjustment to higher rates. They point to a two-tier market structure: ultra-high-net-worth buyers access capital through private banking, off-market transactions, and portfolio-based lending, while mainstream buyers remain reliant on conventional mortgages and public listings.
For institutional investors and analysts, this means that traditional mortgage data is an increasingly unreliable guide to what’s happening at the top of the market. The buyers driving Manhattan’s luxury surge often do not appear in public lending statistics, and the properties they buy may never show up in listing data. The result is a market that largely falls outside conventional measurement.
Whether this private banking financing model expands beyond Manhattan will depend on the development of similar concentrations of wealth and banking infrastructure in other markets. For now, it has created a luxury real estate ecosystem in Manhattan that operates independently of the mortgage-rate environment dominating national headlines.
As the gap between public data and private market activity widens, understanding Manhattan’s luxury market will require more profound insight into these alternative financing channels and the off-market networks that now define how the city’s most valuable properties change hands.
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