Executive Summary
• The CBRE Lending Momentum Index increased by 5.5% quarter-over-quarter and 69% year-over- year in Q1.
• With tightening conditions early in the year, spreads on closed commercial seven- to 10-year, 55%-to-65%-loan-to-value (LTV) fixed-rate permanent loans fell by 27 basis points (bps) quarter-over-quarter to an average of 158 bps. Multifamily spreads tightened by 29 bps to average 144 bps.
• Increased bridge loan closings in Q1 gave alternative lenders the leading market share among non-agency lender groups.
• Industrywide CMBS issuance totaled $20.8 billion in Q1, compared with $10.2 billion a year earlier. Spreads on 10-year AAA CMBS bond issues widened through early March, reaching swaps + 133 bps from swaps + 92 bps in early January.
• Multifamily agency lending totaled $30.9 billion in Q1, down 12.9% year-over-year.
• The percentage of loans carrying interest- only terms increased to 68.3% in Q1 from 62.5% in Q4. Underwritten cap rates and debt yields fell due to lower LTV ratios.
• The Federal Reserve has hiked its short-term federal funds rate by 0.75% so far this year and signaled several more rate increases ahead. Treasury yields rose but the yield curve flattened for two-year and longer-dated maturities.
