State of the Market

The current economic cycle has been an especially active one, filled
with market developments and effected by change. Keeping up with the Fed’s unfolding interest rate
drama, the ever-evolving CMBS landscape, and spate of new lenders
entering the scene can be a full-time affair. Here’s what borrowers can
expect from the different lending segments right now.

Interest rates for CMBS loans currently range between 4.50-4.75% for 10-year fixed rate money. This is about 0.25-0.50% higher than earlier this year, which reflects the fluctuations we’ve been seeing lately. According to Commercial Mortgage Alert, “Amid ongoing volatility in the broader financial markets, CMBS prices generally have plummeted over the past few months”.

The market for life insurance company financing however remains quite liquid. Expect most 10-year fixed insurance company loans being made right now to be in the 3.50-4.50% range.

Borrowers looking for shorter term fixed rate or floating rate financing like bridge and construction loans may want to include banks in their search. Interest rates for these institutions vary greatly, but with deposit rates still at historic lows, banks are increasingly competitive.