Trends Affecting the Commercial Lending Industry Heading Into 2017

January 5, 2017

As we start 2017 it is important to be informed about trends
that affect the commercial lending industry. The following are trends that may affect
the commercial lending industry through 2018:

1. Interest rates have moved up since the
presidential election. U.S. treasuries appear to be stabilizing after a
volatile period that saw the 10-year treasury yield increase from 1.63% on
10/3/16 to 2.44% on 1/3/16. Most lenders have increased coupon rates (rates
offered to borrowers) by a minimum of 25-35 basis points.

2. The majority of our life insurance correspondent
lenders have increased lending allocation for 2017. This should help keep the
long term fixed rate loan market liquid throughout the year.

3. The CMBS market has stabilized through the end
of 2016 and into early 2017. The Dodd-Frank risk retention loans have only been
required since 12/24/2016, but CMBS lenders seem optimistic that 2017 will be a
good year. Liquidity in this segment is still strong.

4. Banks are cautious, but still actively making
commercial real estate loans. Banks will continue to “pump the brakes” by
increasing or decreasing interest rate spreads based on their risk appetite and
ability to work through regulatory compliance.

5. The agency side of the business is expected to
remain strong. There is no sign of a slow down for Fannie Mae and Freddie Mac.

6. The overall economy in the U.S. is strong.
Additionally, there is a positive euphoria in the financial markets that have
been unstable since the U.S. presidential election. Positive sentiment is
always good for the mortgage business.

We are proud to be members of the commercial lending industry and we strive to provide you with the best service and information possible.

Dan Friedeberg