Q1 2022 lender segment market update

Q1 2022 Lender Segment Market Update

February 24, 2022

The end of the first quarter of 2022 is fast approaching, and there has been no lack of activity. The emerging war between Russia and Ukraine, the threat of persistent inflation in the U.S. economy, and the continued effects of COVID 19 have impacted the U.S. financial markets and created volatility. Despite all of this, the U.S.’s major commercial real estate markets remain healthy, and liquidity in the finance market is at an all-time high.

The following is our Q1 2022 update:

Insurance Companies

As we enter the first quarter of 2022, the insurance company sector of the market is still quite liquid. For most insurance companies, 2021 was a banner year for production. Insurance companies were happy to deploy money into commercial and multi-family real estate loans because the major real estate markets in the U.S. were healthy, loan delinquencies remained at an all-time low, and insurance companies received what they perceived as high “relative values” for yields on their investments. Insurance companies measure the “relative value” of yields on commercial real estate loans against that of comparable investments. With these market dynamics rolling into 2022, most insurance companies plan to invest as much, or more, this year as they did in 2021. Still, recent increases in corporate bond yields and underlying indexes such as U.S. Treasuries mean real interest rates are increasing. As a result, insurance company lenders may struggle to get out as much money as they want to in 2022.

Banks/Credit Unions

For rates at the low end of the range, lenders are looking for lower-leverage, high-quality assets in infill locations. Construction and bridge bank loans are readily available under competitive terms. One takeaway from many banks in the past few years is their willingness to modify or do simple rate reduction or term extensions to accommodate and retain clients. This is a function of the high level of liquidity in the market. Banks are highly active in all facets of the market right now.


Freddie Mac and Fannie Mae have been lending throughout the COVID-19 pandemic and continue to do so through the market volatility caused by the escalating military conflict between Russia and Ukraine. As government-sponsored entities, they have helped keep the multi-family finance markets exceptionally liquid during this time. Most agency loans no longer require the principal and interest reserves implemented at the beginning of the pandemic. Agency debt is still quite competitive for higher-leveraged loans in the 65–75% LTV range, but other sectors have recently been able to beat them out on most moderate and conservative loan requests. Right now, the agencies have been focused on multi-family properties that are “mission-driven” and have a low-income component.


The CMBS market was very active in 2021 and continues to be active at the beginning of 2022. The recent market volatility has caused spreads to widen over the past few weeks. According to a 2/18/22 article in Commercial Mortgage Alert, “While markets have been spooked for a month by a hawkish Federal Reserve and jitters about a possible invasion of Ukraine by Russia, issuers predicted they would be able to push through the volatility.”

Debt Funds

A debt fund is a private-equity-backed fund that lends money to commercial and multi-family real estate owners. Debt funds have become an extremely active segment of the commercial real estate finance market over the past several years and can offer borrowers loans and terms that more traditional lenders cannot. The growth in liquidity from debt funds has added to the unprecedented level of liquidity in the current market. But debt funds are not immune to the same rising pressures as the rest of the market, and recent whisper talk has suggested that down-the-middle debt fund spreads will increase in the short term.