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Commercial Loan Rates

The commercial loan rates of 750 different commercial mortgage lenders can be found instantly using C-Loans.com.  Simply complete the commercial loan mini-app (takes just four minutes), select the six lenders with the lowest commercial loan rates, and then press, 'Submit".  Within minutes these hungry commercial lenders will contact you.  And C-Loans is free!  Click here to the commercial loan rates of hundreds of commercial lenders.


Commercial loan rates are higher than home loan rates.  This surprises a lot of borrowers.   Aren't most commercial loans larger than most home loans?  When you buy a large box of Cheerios instead of a small box, isn't the price per serving cheaper?  Therefore commercial loan rates should be cheaper than home loan rates.

The reason why commercial loans rates are a little higher than home loan rates has to do with the fact that home loans are far more liquid.  If a bank makes a home loan and then needs cash, the bank can easily sell the loan to Fannie Mae or Freddie Mac.  In contrast every commercial loan is slightly different because there is no such thing as a standard commercial property.  Each commercial property is slightly different.  As a result, there is no Fannie Mae equivalent for commercial loans - no organized secondary market.  

Most commercial loans today are therefore portfolio loans.  This means that the commercial lender has to keep the loan in its portfolio for the entire term of the loan.  Commercial loans therefore lack liquidity, and the lenders demand higher commercial loan rates.

There is a hierarchy of commercial lenders, with some having much lower commercial loan rates than others:

LENDERS WITH THE LOWEST COMMERCIAL LOAN RATES

  1. Life companies typically have the lowest commercial loan rates.  Unfortunately life companies seldom make commercial loans of less than $3 million, and most of their commercial loans are larger than $5 million.  However, if you own a gorgeous commercial property and you are willing to accept a commercial loan of only 55% loan-to-value, you will find that life companies have the lowest commercial loan rates by far.

  2. Conduits are mortgage companies that originate commercial loans destined to become commercial mortgage-backed securities.  These commercial loans are very standardized, and conduits will originate commercial loans as small as $1 million.  For almost ten years conduits were the most active commercial lenders in the country.  Unfortunately the Great Recession wiped out almost all investor demand for commercial mortgage-backed securities.  As a result, virtually no conduits are making commercial loans today.  Until the Great Recession, conduits offered the second cheapest commercial loan rates.

  3. Commercial banks offer the best commercial loan rates for mortals like you and me.  Their commercial loan rates are in the range of 6.5% to 7.375% today for most commercial properties, and their loan fee is typically only one point.  While commercial banks are still actively making commercial loans today, their underwriting standards have definitely gotten tougher.

  4. Real estate investment trusts (REIT's) used to make a few commercial loans before the slump, and their commercial loan rates were decent, but higher than those of a commercial bank.  Most of the mortgage REIT's took a beating during the Great Recession and are not making many commercial loans.

  5. Hard money commercial lenders have the highest commercial loan rates.  Hard money commercial lenders sell their commercial loans to private investors.  Hard money lenders rarely run out of money to lend because they can simply raise their commercial loan rates to attract more capital.

The commercial loan rates of 750 different commercial mortgage lenders can be found instantly using C-Loans.com.  Simply complete the commercial loan mini-app (takes just four minutes), select the six commercial lenders with the lowest commercial loan rates, and then press, 'Submit".  Within minutes these hungry commercial lenders will contact you.  And C-Loans is free!  Click here to the commercial loan rates of hundreds of commercial lenders.

 

 

 


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