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Fed Policy Shift Calms Equity, Debt Markets; Drives Strong CRE Lending Activity
Commercial real estate lending activity was strong in the first quarter of 2019, with equity and debt markets calmed by the Federal Reserve’s decision to hold firm on rates, according to the latest research from CBRE. The CBRE Lending Momentum Index, which tracks the pace of commercial loan closings in the U.S, was relatively unaffected in Q1 2019 reaching 239—an increase of 17.9% year-over-year.
CBRE Capital Markets’ Brian Stoffers says, “Despite recent volatility in the debt and equity markets, the Fed’s decision to leave borrowing costs unchanged has created a favorable commercial lending environment and activity has remained robust. The resulting relatively flat yield curve has given borrowers many options to consider between fixed and floating rate structures.”
Banks maintained a strong origination pace in Q1 2019 as in the previous quarter, accounting for 39% of non-agency commercial mortgage closings—up from 25% a year ago and leading the four major lender categories.
CMBS conduit lenders had a 31% share of the market, up from their 24% share of a year ago. CMBS issuance in Q1 2019 was down 15% from Q1 2018. Most market experts expect full-year 2019 issuance to be less than 2018 volume.
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