Recent tightening monetary policy has brought to the forefront lenders utility of rate swaps and caps for CRE loans. With the stable interest rates of the past decade or so, these were largely kept in the closet. CRE investors have long had multiple avenues for hedging against rising interest rates. With the FED’s commitment to...
Category: Commercial Loans
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IT’S DEJA VU ALL OVER AGAIN
It’s said in investment circles that markets have a memory of about 20 years. Lessons learned more than 20 years ago are forgotten. Those of us around during the inflation of the ‘70s are hard pressed to recall the details. Many of the commercial real estate and financing professionals and practitioners during the...
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THE MARKET’S REACTION/OVER REACTION TO INFLATION
Actually, the market reacts to two inputs for inflation: the economic numbers themselves, primarily CPI and PPI, and also the Fed’s actions, either reactive or proactive, to the inflation metrics. Current Market Drivers The US labor market is tight and supply chains stay stressed. The Russian-Ukraine war exasperates commodity pricing. The financial system...
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COMMERCIAL BRIDGE LOANS
One of the loan types that has come into demand recently is a bridge loan. They’re typically used in situations where there’s stress in the situation resulting in a bargain element in the pricing, and time is a material factor. (Our current environment is causing a lot of this.) We have a fair amount of...
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SPEEDING UP YOUR LOAN UNDERWRITING PROCESS
The CRE investment market should continue “hot” into 2022 as new capital enters the fray and inflation mount – the question is whether the lending industry can keep up the borrower demand. “Sellers will continue to drive terms and command short escrow periods for top-notch properties,” per Rob Murphy, Vice President of Structured...
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BE PREPARED FOR A MORE AGGRESSIVE FED
The FOMC made it clear on Wednesday, 2-2, (as clear as they make anything) that rate hikes are imminent. Chairman Powell projected a hawkish tone in his post-meeting press conference leaving open the possibility of several sequential rate hikes this year. A 125 bps (basis points) total rate increase this year (five 25 bps hikes)...
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FED TO ACCELERATE TIGHTENING, WITH AS MANY AS THREE RATE HIKES IN 2022
As recently as March, the Fed wasn’t expected to raise rates until 2024. Now, the central bank could implement as many as three rate hikes next year. The Federal Reserve is tightening up its pandemic-era easy money policy and will increase the pace of tapering, a move that could usher in rate hikes earlier...
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SIGNS OF THINGS TO COME
At the beginning of November, the Fed announced that it would begin tapering its $120 billion per month asset purchasing program by $15 billion monthly. The pace of that tapering will remain closely watched over the coming year, as the Fed will continuously be juggling its dual goals of bringing long-term inflation to 2%...
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CRE MORTGAGE DELINQUENCIES CONTINUE DECLINE
Delinquency rates of mortgages backed by commercial and multifamily properties have broadly improved in recent months, the Mortgage Bankers Association (MBA) reported this week. “Performance is still property-type dependent, with the properties that saw the most immediate and dramatic impacts from the pandemic – lodging and retail – still experiencing considerably more stress than others,...
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CRE MORTGAGE DELINQUENCIES CONTINUE DECLINE
Mortgage delinquency rates, which have been a bellwether of distress in the CRE sector during the pandemic, are continuing to improve. One area of concern, however, is that elevated levels of delinquencies in the lodging and retail sectors are expected to linger as troubled loans slowly work toward resolutions, with some defaults expected. There...