Rates Rise, but So Does Mortgage Activity

There is a rush on commercial mortgages as business seeks to get in on refinancings before rates go up, according to Bloomberg's story yesterday, "Wall Street Keeps Swagger in CMBS as Sales Surge: Credit Markets."

It states, "New York City landlords to South Carolina hotel operators are rushing to refinance mortgages before the Federal Reserve starts cutting stimulus that pushed interest-rate benchmarks to record lows."

Rates notched up since the Fed earlier this year warned that it might pull back from its stimulus measures in which it buys federal debt, and which in turns keeps interest rates low.  That made investors nervous.

The Bloomberg story was prescient:  Stocks took a hit yesterday when Fed minutes were released repeating the warning that a pullback was coming.

But the article notes that the $80 billion or more of commercial mortgage backed securities projected to be issued are well beyond forecasts.

The article quoted Alan Todd, a New York commercial-mortgage debt analyst at Bank of America, as saying that the increase in rates hasn’t discouraged landlords from seeking new loans as had been anticipated. “A lot of borrowers are getting off the sidelines before rates go up again,” he said in the Bloomberg report.

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