Continued Growth and Stability for U.S. Lending Market
- Despite an increase in short-term interest rates by the Federal Reserve in June, capital markets remained quite favorable in Q2, with rising equity prices, tight spreads and fairly limited volatility.
- The yield curve has flattened over past quarter, reflecting the Fed’s interest rate policy changes.
- CBRE’s Lending Momentum Index, which tracks loans originated or brokered by CBRE Capital Markets, shows that loan closings edged higher between March and June, and are 27% above the year-earlier level. Volume improved across all major lending groups, as capital is readily available.
- Reflecting the favorable capital market environment, CMBS issuance revived in Q2, lifting year-to-date issuance to $38.8 billion and well ahead of 2016’s pace of $30.7 billion.
- CBRE’s measures of loan underwriting continued to show stabilization in Q2. Overall average debt service coverage, LTVs and debt yields were virtually unchanged from the previous quarter.