New loan requests are surging for ValueXpress as interest rates for CMBS conduit loans have plummeted to the lowest levels in history. Recall that the interest rate on a 10-year fixed-rate CMBS conduit loan consists of the 10-year swap rate plus the loan spread. The swap rate has declined steadily since reaching a multi-year high of 3.30% in November 2018. On its way down, the swap last saw 2.50% in April and fell to 2.00% at the beginning of August before diving 50 basis points (bp) over a one-week period at the beginning of August. It hit a recent low of 1.33% on September 3.
Normally when the swap rate declines, loan spreads increase to provide investors in CMBS an adequate return. In this instance, loan spreads have move up slightly, perhaps 15-25 bp, nowhere near the almost 200 bp decline in the swap rate.
“Based on this perfect confluence, we are offering the lowest interest rates in my 25-year career originating CMBS conduit loans,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “Low leverage multifamily, office, retail and industrial deals are below 4%. Hospitality is only a touch higher. Even high leverage and small balance deals are being quoted with rates in the 4.25% area.”
“I am urging our clients who have yet to pull the trigger on a CMBS loan for the purchase or refinance of an eligible property not to wait,” commented Dennis Suh, Senior Vice President at ValueXpress. “While the swap has now stabilized in a 1.40-1.50% range, it may not stay there for long.” To lock in these low rates, contact Michael Sneden (email@example.com), Dennis Suh (firstname.lastname@example.org) or Gary Unkel (email@example.com).