Market Update Q4, 2017

As 2017 comes to an end, it is critical to stay current on the ever-changing commercial real estate finance (CREF) market. The following are current trends that have been identified at Barry Slatt Mortgage:

1. Most major MSA’s throughout the United States are considered by the CREF community to be healthy.
2. The overall level of liquidity in the CREF market is still considered to be at an all-time high.
3. Institutional investors, foreign investors, and all segments of the lending community are attracted to the yields and perceived risk (or lack of risk) of investing in commercial loans. Lenders frequently compare commercial real estate loans to attractive investments such as bonds or real estate equity. Investors are currently favoring commercial real estate loans over these alternative investments.
4. Interest rates are still at all-time lows for most loans. The high level of liquidity in the market has created competition for good quality loans. The competition has created a tightening of spreads as interest rate indexes have moved up. The net result is that borrowing costs currently remain at all-time lows. Interest rates for 10-year fixed rate loans are generally ranging from 3.50-4.50% depending on the risk profile.
5. Flexible terms are available. The high liquidity in the market has created flexible terms for borrowers. Loans are currently available with features such as flexible prepayment penalties, interest only (when leverage permits), high leverage, and extremely low interest rates on low leverage loans.
6. In short, it is a good time to be a borrower in this market.