Highly Liquid Commercial Mortgage Market Continues to Expand
U.S. Lending | Q4 2021
04 feb. 2022 2 Consumo de tiempo
- Commercial lending markets were highly liquid and continued to expand in Q4 2021. Credit spreads on permanent loans remained tight, while underwriting standards were generally unchanged from Q3.
- The CBRE Lending Momentum Index increased by 10.3% quarter-over-quarter and is now 42.2% above its February 2020 pre-pandemic close.
- Bridge lending remained strong in Q4, lifting alternative lenders’and banks’ non-agency lending market share.
- CMBS loan origination activity increased its market share in Q4, as loan pricing remained competitive. Spreads on CMBS bond issues have supported higher levels of originations, with 10-year AAA-rated conduit paper trading near swaps + 68 basis points (bps) in recent weeks, consistent with averages over the past year.
- CBRE’s loan underwriting measures were mixed in Q4. While the underwritten debt-service coverage ratio (DSCR) inched up and loan-to-value ratio (LTV) fell, cap rates and debt yields were lower. The percentage of loans carrying full or partial interest-only terms rose to 62.5%.
- As investors anticipate short-term rate hikes, Treasury yields increased. Two-year issues had the largest increase in recent weeks. The benchmark 10-year bond reached 1.81% on January 27, up from 1.52% on September 30.
- Spreads on commercial seven-to 10-year, 55%-to-65% LTV permanent loans tightened by 53 bps quarter-over-quarter to an average of 185 bps. Multifamily spreads tightened by 28 bps to average 173 bps.
- Multifamily agency lending totaled $46.1 billion in Q4, lifting the 2021 total to $139.6 billion—12% below 2020’s record production volume.