Why commercial brokers may be best positioned to explain debt costs
“I spoke with a commercial borrower recently who said that they and other borrowers are just kind of struggling to figure out what the new pricing is,” Snyder said. “And part of the result of that is you have gaps between lenders who haven’t really quite caught up to higher benchmark interest rates. You have others that are offering much higher rates.”
For brokers, the question is what to do with that confusion. Snyder sees a business development angle in it.
“But the takeaway for someone in the space right now who wants to maintain strong relationships with their clients is being able to pass this information along,” Snyder said. “They can really be a strong conduit of pricing information right now because the market is changing so quickly. And right now, if you are tied into the lending market every day, you kind of have the first glimpse at where new pricing is heading. And that’s really valuable to borrowers.”
Refinances have the tailwind
Property sales are where a sustained rise in rates could have a negative impact. The effect has barely shown up in the data yet, Snyder said.
“It’s possible that they fall, right? In October 2023, we saw 5% 5-year yields, and they immediately fell off,” he said. “But if they remain higher, then it decreases the prices that buyers can afford to pay. It’ll require more equity or lower prices from the sellers. So that could, in theory, open up a gap between seller and buyer price expectations.”
