Economists and industry executives weigh in on the Fed’s decision to raise the benchmark rate by 75 basis points.
The Federal Reserve made its boldest move yet yesterday to tamp down inflation with a 0.75 percentage-point rate increase, the largest since 1994. Commercial real estate economists and executives say the industry has already seen impacts from earlier rate hikes, including higher cost of debt capital, tighter underwriting and collapsing deals as lenders and investors grow increasingly cautious.
“The rise in interest rates—and volatility more broadly—has led to a sharp uptick in cost of funds for both borrowers and lenders. As a result, lenders are reducing leverage, primarily out of concern for refinanceabilty,” Sabina Reeves, CBRE Investment Management chief economist, told Commercial Property Executive...
“The rise in interest rates—and volatility more broadly—has led to a sharp uptick in cost of funds for both borrowers and lenders. As a result, lenders are reducing leverage, primarily out of concern for refinanceabilty,” Sabina Reeves, CBRE Investment Management chief economist, told Commercial Property Executive...
RSK: Those in certain sectors of CRE that are poorly managed or over leverage will suffer the most.
Ken Notes: CRE will need private investors, public support, market sectors in demand, and competitive rates. This is still more stable than the stock market...
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- - Volume: 10 - WEEK: 26 Date: 6/21/2022 9:28:13 AM -