Despite Hiccups, CMBS Volume Still on the Rise via National Real Estate Investor

Despite recent volatility in capital markets, conduit lenders are confident they will stay on track to originate more loans this year in any year since 2008. “Whatever we lost, by the end of the year gets made up,” says E.J. Burke, executive vice president and group head of KeyBank Real Estate Capital.

Interest rates for conduit loans rose earlier this summer in line with the rise in 10-year Treasuries. Conduit interest rates depend largely on the yield that investors demand for CMBS, which spiked up in May for AAA-rated CMBS from about 80 basis points over the swap rate to about 130 basis points in July, according to data from Commercial Mortgage Alert. But the CMBS yields fell back again in August to a little over 100 basis points.

Including the steady rise in yields for Treasury bonds, conduit lenders are now offering 10-year interest rates in the 5.4 percent to 5.5 percent range, experts say. That significantly less than the high rates offered this summer, but still higher than the 4.5 percent to 4.75 percent conduit interest rates common earlier this year.

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