6 Current Capital Market Trends to Watch

There have been a lot of developments recently in the commercial landscape that could impact borrowers and lenders alike. A big shake-up in the CMBS space and the Fed’s ever-evolving interest rate drama mean some important changes may be on the not too distant horizon. Here are six capital market trends you should know about.

1) The market correction has caused some market providers to drop out—CMBS shops in particular. This may ultimately be a positive phenomenon where the strongest players are the survivors, though over the past week pricing for some shops has come in about 20-30bps.

2) There is still value in the CMBS executions that do what they were designed to: playing in the space that life companies and banks cannot—higher LTV, non-recourse, secondary/tertiary markets and higher risk loans.

3) Banks and life companies remain very liquid and active in the current environment. Both bankers and life co’s are finding relative value in investing in commercial mortgages.

4) Fundamentals of most major real estate markets remain strong.

5) The unprecedented amount of maturing CMBS loans that were closed in 2006/07 have not yet posed any problems or had any negative impact on the larger lending landscape.

6) Delinquency rates among commercial mortgages remain low.