Lending Volumes to Remain Consistent Through Next Year

While the last 17 months have been tumultuous for many, Newport Beach-based MetroGroup says lending volume remains consistent. J.D. Blashaw, vice president at MetroGroup Realty Finance, recently discussed the current state of the capital markets and his outlook for third quarter in an exclusive with ConnectCRE.

“We expect consistent volume that is similar to the last three to four years. We expect this volume to continue throughout 2021 and into next year,” says Blashaw. “As a result of the Federal Reserve’s commitment to keep employment rates up and the economy healthy, we also see interest rates remaining relatively low.”

The Mortgage Bankers Association is projecting the 10-year T-bill to average approximately 1.5 percent for the balance of 2021 and average just slightly below 2 percent for 2022. These 10-year T-bill rates would put all-in rates in the high 2 to low 4 percent range, which is still quite a competitive environment. The current 10-year T-bill at 1.3 percent is creating all-in rates today in the 2.5 percent to 3.5 percent range, the lowest in MetroGroup’s 38-year history, Blashaw observes.

“MetroGroup’s loan production in the first half of 2021 has been consistent with our activity in the previous three to four years,” he says. “We saw an equal amount of sale activity together with maturing loans needing to be restructured.”

Coincidentally, in the last couple of years, the capital providers with which MetroGroup sources its requirements almost mirror that of existing outstanding loan balances (on a percentage basis) of the various investor groups nationally:

• Banks and thrifts: 38 percent
• Agency-GSE: 22 percent
• Life companies: 15 percent
• CMBS: 14 percent
• Others: 11 percent