Volatility ripples through markets as Fed rate hike looms

<p><span style="font-weight: 400;">Short-term borrowers are being hit hard by market volatility right now. </span></p> <p><span style="font-weight: 400;">Commercial real estate investors looking for bridge debt will find that two to three-year debt is up a lot more than long-term yields, such as seven to Ten-year stabilized.</span></p> <p><span style="font-weight: 400;">The Ten-year is still experiencing volatility, moving within a 10-point range in the last week.</span></p> <p><span style="font-weight: 400;">Meanwhile, borrowers who usually look for longer term deals have asked Thirty Capital how they will be affected by Fed rate hikes which are on the horizon. </span></p> <p><span style="font-weight: 400;">Thirty Capital anticipates that the rate increase set for March will be a half basis point, not a quarter. </span></p> <h1><span style="font-weight: 400;">Will the Ten-year continue to be range-bound?</span></h1> <p><span style="font-weight: 400;">Going forward, the question is whether the Ten-year will be range-bound at around 1.75, or whether the yield curve will flatten. </span></p> <p><span style="font-weight: 400;">Thirty Capital Analyst Bryan Kern says he believes the flattening is temporary, but that things will change once the Fed finishes tapering in March. That, along with a rate hike, will lead to a combination of inflation and growth. By the second quarter of the year, the Ten-year will start to move higher. </span></p> <h1><span style="font-weight: 400;">Exiting loans with longer maturity</span></h1> <p><span style="font-weight: 400;">Thirty Capital Analyst Jeff Lee gives a thorough analysis of what’s happening on the CMBS side. And Thirty Capital CEO Rob Finlay points out that for borrowers looking for exit loans, it’s probably time to look for exit loans with a bit longer maturity, because the long-term money is fairly cheap.</span></p> <p><span style="font-weight: 400;">Jeff adds: “We had some deals that were closing that had a month or two left to maturity, but they needed to be opportunistic