Commercial Loan Interest Rates

Commercial loan interest rates are currently very low; however, these rates are tied to market indexes which ares subject to change at any time. Many borrowers have asked me if rates will continue to stay low or increase after the election. The truth is, it all depends on the market. There is a fair amount of uncertainty in our economy which naturally causes volatile interest rates. No one holds the crystal ball which is why borrowers want longer fixed rates and commercial lenders typically don’t offer fixed rates over 5-10 year periods.

Commercial interest rates are based on the type of project you have, credit worthiness, debt coverage ratios, the lender’s cost of funds and the market indexes. Different projects/circumstances will impact the interest rate on your loan. An apartment loan may receive a fixed rate of 4.3% fixed for 10 years while an owner occupied property may get a 4.9% fixed rate for 5 years. A special use property would receive a 5.61% rate fixed for 5 years.  It is important to understand this so that you have a realistic expectation of what you will get from the lender.

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