January 3, 2018

Current Market Interest Rates – December 2017

Interest rates on bank-quality commercial real estate loans increased for all property types in December 2017 and remain high above their marks from a year ago. The yield on the benchmark 10-year Treasury Bond increased month-over-month, and bankers are starting to become a bit more cautions relative to CRE lending, accounting for the increase in borrowing rates. Multifamily property types remain consistently lower month-over-month.  Other benchmark interest rates are available from the Wall Street Journal.

Collateral TypeChangeCurrent MonthPrior MonthPrior Year
Office4.35%4.32%3.82%
Multifamily3.88%3.87%3.48%
Hotel4.84%4.80%4.35%
Retail4.40%4.39%3.83%
Industrial4.25%4.23%3.77%

Assumptions

Fixed-rate
DSCR: 1.5x (2.0x for hotel)
LTV: 70% - 80%
Maturity: 10 years
Amortization: 20 - 30 years