Today's Commercial Mortgage Rates

Welcome to Select Commercial's comprehensive guide on commercial mortgage rates. As industry leaders with over 30 years of lending experience, we provide real-time updates on today's best rates across various loan products. Whether you're an investor or business owner, our platform offers insights, tools, and expertise to help you navigate the ever-evolving commercial mortgage landscape. Stay informed, make informed decisions, and let's achieve your financial goals together.

Commercial Mortgage Rates - updated 09/27/23

Loans Over $1,500,000 Get Free Quote
Loan Product Rate* LTV
Commercial Real Estate 6.76% Up to 75% LTV
Multifamily 5.84% Up to 80% LTV
Industrial 6.76% Up to 75% LTV
Office 6.76% Up to 75% LTV
Retail 6.76% Up to 75% LTV
Self Storage 6.76% Up to 75% LTV
Mobile Home Park 6.10% Up to 75% LTV
Medical 6.76% Up to 75% LTV
Single Credit Tenant 6.56% Up to 75% LTV
Single Use - Special Purpose 8.50% Up to 75% LTV
Owner Occupied 6.66% Up to 90% LTV
Hotel 8.50% Up to 75% LTV
Motel 8.50% Up to 75% LTV
NNN Single Tenant 6.56% Up to 75% LTV
CMBS 7.06% Up to 75% LTV
SBA 7a 8.50% Up to 90% LTV
SBA 504 6.52% Up to 90% LTV
Bridge 9.00% Up to 80% LTV
*Rates start as low as the rates stated here. Your rate, LTV and amortization will be determined by underwriting.

Frequently Asked Questions

How has the Current Banking Environment Affected Commercial Real Estate?

Distress is currently low in the commercial real estate market. After Signature Bank and Silicon Valley Bank failed, there was widespread concern that other regional and local banks would fail due to the high levels of commercial real estate loans held in their portfolios. With the exception of some market sectors, most commercial mortgage portfolios have performed well. Usually, during times of market uncertainty, commercial real estate distress levels increase dramatically. Current levels of distress are low by historical standards. At the end of 2022, the level of commercial real estate assets under distress was only 1.2% of the total national sales volume. This number is important to watch as many loans face maturity and higher rates upon refinance in 2023.

MSCI, Inc. estimates the volume of loans maturing in 2023 at $400 billion. The Mortgage Bankers Association pegs the amount at over $700 billion. Many analysts predict that loan defaults will increase for two reasons: many of these maturing loans will need to be refinanced at higher rates (and may suffer cash flow problems) and there are fewer active lenders in the market due to the recent bank failures. Loan underwriting has tightened up as the result of global financial conditions and the average loan to value has been dropping on new originations. Many properties have been able keep pace with the market due to escalating rents and strong appreciation. Other properties, mainly in the office and retail sectors, have suffered due to higher vacancy factors and fixed long-term rental rates. Operating income growth has been strong in the multifamily and industrial markets, which represent about 35% of the maturities in 2023. Revenue growth in the office market has been flat for the past five years and vacancy rates have risen. This sector, which accounts for about 26% of 2023 maturities, is expected to see a significant increase in distress and defaults as many properties will not underwrite well enough to pay off existing loan balances.

In February 2023, Trepp Inc., a data analytics company, reported an increase of commercial mortgage-backed securities loans (CMBS loans) going into special servicing. They estimate the percentage of these loans at 5.2%. Many of these properties, including office buildings and retail centers, may be subject to distressed sales. In addition, many borrowers with adjustable-rate loans also face distress unless they hedged their risk with interest rate caps. These adjustable-rate borrowers are seeing current rates generate debt payments which exceed the net operating income of the property and an inability to raise rental rates to keep pace with the increases in debt service. Many of these borrowers will need to either sell the property in a distress sale or invest more capital into the property and refinance for lower loan amounts.

National, regional, and local banks hold more than half of the total amount of commercial real estate loans which will mature in 2023. So far, we have not seen distress levels high enough that would threaten the financial stability of these institutions. Most lenders are likely to extend impending maturity deadlines as opposed to foreclosing as foreclosure would cause losses. Many will employ other methods, including extensions and workouts, for the foreseeable future.

Most analysts agree that the problems encountered by Silicon Valley Bank and Signature Bank are not applicable to other small and local banks with commercial real estate portfolios. These two large bank failures were caused by much more specific situations. Silicon Valley Bank was too concentrated in the venture capital and technology sectors and did not diversify their lending. Signature Bank was too narrowly concentrated in the cryptocurrency sector, a market sector under intense scrutiny of federal regulators.

The commercial real estate market is very varied. There are many different sectors, geographic areas, and borrower types. Banks that lend to this market are able to diversify their risk by lending to a wide variety of borrowers and limiting their exposure to any one particular area or property type. Lenders who employ diversified lending practices and have conservative underwriting guidelines are likely to experience little or no distress or financial losses during this current market cycle.

 

We don’t expect the multifamily sector to be affected by these recent closures unless the banking crisis expands and causes other banks to be closed down. These banks were affected by business lending in the tech and cryptocurrency sectors. Multifamily lending for banks has overall been healthy and we don’t expect that to change any time soon. However, we are seeing lending activity slow down as rates have risen due to the Fed’s policy of raising rates to combat inflation. Rate increases have caused many multifamily properties to experience cash flow problems.

Last year, starting in May 2022, the Federal Reserve began increasing the Federal Funds rate in order to slow down the rate of inflation. The Federal Reserve continued raising the Fed funds rate aggressively during 2022. In 2023, the Federal Reserve announced that it would continue with rate increases in 2023, although the rate increases would not as sharp. These increases in the Fed funds rates have caused long term US Treasury rates to rise dramatically as well. In January of 2022 the 5 year Treasury rate was at 1.37% and the 10 year Treasury was at 1.66%. Today, the 5 year Treasury is at 4.19% and the 10 year is at 3.95%. Most commercial mortgage loans are priced based on one of these two indices. Equally shocking, the Prime Rate has climbed from 3.50% to 7.75% over the same time period. Many consumer and small business loans are based on the Prime Rate. Today’s much higher rates are making borrowing much more costly for individuals, small businesses, and commercial real estate investors. With a larger portion of their cash flow being used to cover higher commercial mortgage payments, investors are finding it hard to remain profitable. Many retail and office buildings are subject to longer term leases, making rental rate increases hard to implement. As such, many properties today are facing intense pressure to stay cash positive. Many billions of dollars of commercial mortgage loans are set to mature in 2023 and owners are facing tough times refinancing this debt at today’s much higher rates. We are already seeing some investors default on their loans, and we expect to see the foreclosure rate increase as more and more investors are unable to refinance maturing debt.

Some commercial mortgage lenders lock rates at application, some lenders lock rates at commitment, while others lock rates prior to closing. We are currently in the midst of an increasing rate environment. Rates quoted at application may increase dramatically during the loan application progress, if not locked. It is very important to understand your lender’s procedure upfront to avoid potential confusion.

In order for a commercial mortgage lender to issue a firm loan approval, they will want to understand the financial condition of the borrower, as well as the fundamentals of the property. The borrower will be expected to supply his personal financial statement showing total net worth and liquidity. He will also need to provide a schedule of real estate owned demonstrating experience managing similar properties. Lastly, the borrower’s credit scores will needed. For the subject property, lenders will look closely at the current rent roll, operating statements showing income and expenses, copies of all leases, and other pertinent property information.

Commercial mortgage rates are determined by many different factors, including property type, location of the property, loan-to-value ratio, debt service coverage ratio, debt yield, borrower’s net worth, liquidity, credit rating and level of experience. Commercial mortgage lenders look at all of these factors to determine the riskiness of the loan before setting rates. Loans with the lowest risk profile will get the best rates. As the potential risk increases, rates usually increase.

Commercial mortgage loans are viewed differently by lenders than residential loans. Home loan lenders look strictly at the borrower’s income and credit in order to qualify. Commercial mortgage lenders look at the subject property’s rent roll, operating statements, and other factors to determine the cash flow or net income potential. Very strong (low risk) commercial mortgage loans might be priced lower than home loans, while weaker performing properties (higher risk) might be priced higher.

Most commercial mortgage loans today are fixed for 5, 7, or 10 years and come with a 25-30 year amortization schedule. Loans can be recourse (personal guarantee) or non-recourse (no personal guarantee). Commercial mortgage loans typically carry prepayment penalties, whereas residential home loans usually do not. Specific terms will be determined by your lender’s underwriting team after your application is reviewed.

Commercial mortgage lenders typically lend up to 75-80% on an apartment purchase (down payment of 20-25% necessary). On other types of commercial property, commercial mortgage lenders will typically lend up to 70-75% (down payment of 25-30% necessary). An exception is for owner occupied business real estate (such as a business owner buying his own property). Owner/users may qualify for up to 90% LTV financing.

Commercial Mortgage Benefits

Commercial mortgage rates start as low as 5.84% (as of September 27th, 2023)
• A commercial mortgage broker with over 30 years of lending experience
• No upfront application or processing fees
• Simplified application process
• Up to 80% LTV on multifamily, 75% on commercial (90% with SBA)
• Terms and amortizations up to 30 years
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation

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Will Commercial Mortgage Rates Drop in 2023?

2023 Commercial Mortgage Rate Forecast 2023 Commercial Mortgage Rate Forecast
The commercial real estate industry is set to face some challenges in 2023. High rates and inflation will likely impact the ability for many investors to find cash flowing deals in the market. While the rate of inflation did lessen towards the end of 2022, it still remained at over 7 per cent at year end. The Federal Reserve has made it clear that they are set to continue raising rates until inflation comes down to its target rate of around 2 percent. Weakening fundamentals and higher cost of capital will likely increase cap rates and lower commercial real estate asset values across the country.

Experts are hopeful that there won’t be a particularly steep recession in 2023. Corporate finances are still strong, and employers will likely try to avoid excessive layoffs. In addition, the average household debt is much lower than at the beginning of previous recessions. While there will likely be an economic downturn in 2023, experts are hopeful that it will be relatively moderate with unemployment not rising above 6 percent. As we approach Q3 of 2023, inflation should be lower which will drive rates down and begin a new economic cycle that will hopefully last for years to come.

The challenges facing the commercial real estate industry in general will have a direct impact on rates in 2023. With rising rates and cost of capital, many properties will not support maximum leverage due to cash flow issues. Sellers may be forced to fall in line with rising cap rates and lower their asking prices if they want to sell in 2023.

However, it’s not all bad news for commercial real estate loans in 2023. As inflation comes down in the second half of the year, rates should decrease as well. This will hopefully spur a lot of activity in the capital markets. Moreover, approximately $162 billion in securitized commercial mortgages are set to mature in 2023. The next 12 months have the highest volume of scheduled maturities for securitized commercial real estate loans over a period of 10 years ending 2032. Borrowers will need to refinance their commercial mortgages, and this will spur activity in the capital markets in 2023.

While commercial rates are volatile right now, and the economy is in a state of flux, we expect the market to settle later in calendar year 2023.

What Happened to Commercial Mortgage Rates in 2022?

Due to record high inflation, commercial mortgage rates have been increasing throughout 2022 and this is slowing down the commercial real estate loan market. The 10 year treasury, one of the most important benchmarks, has more than doubled year to date. Entering 2022, the 10 year treasury was at 1.66%. In June of 2022, this index sits at 3.38%.

As the Federal Reserve tries to fight inflation, market experts expect commercial mortgage rates to continue to rise throughout 2022. With rising interest rates, and sellers’ reluctance to lower sales prices, there is a real disconnect between buyers and sellers in the market. Many commercial real estate deals have stalled or blown up due to this disconnect. With rates climbing over such a short period of time, lenders are having a hard time financing properties at maximum leverage. Most deals are limited by cash flow at much lower LTV ratios than in the past few years. It generally takes some time for sellers to adjust their sales prices as rates increase. A rise in rates typically generates a rise in cap rates. When cap rates go up, commercial real estate prices come down. We are hopeful that as time goes on, sellers will become more reasonable about their sales price expectations and commercial real estate activity will continue its rapid recovery from the Coronavirus pandemic.

As rates continue to rise in 2022, more of the property’s net operating income will be required to make debt payments, creating a potential cash flow shortage for many owners and investors. If rates continue to rise and cap rates do not follow suit, many deals are simply not financeable and don’t make economic sense to investors. One positive here is that multifamily rents are continuing to rise in many markets. This rent growth may be able to offset the cashflow shortages caused by the increase in rates. For the last couple years, the market has seen countless property owners refinance in order to take advantage of record low rates. At this point in 2022, there aren’t many people who want to voluntarily refinance. Commercial mortgage activity right now is limited to those owners with maturing commercial mortgage loans and those who need to refinance to access their equity for other purposes. Sales volume has slowed dramatically as potential investors are waiting to see what happens with sales prices.

During the current period of uncertainty, investors and sellers will need to accept lower commercial real estate price growth than we’ve seen in the past few years. Real returns on stabilized properties will be lower than in years past. However, there are still deals out there that make sense for investors. For example, many people are focusing on value-add properties now and looking to maximize annual cash flow returns as opposed to focusing on property appreciation.

The bottom line is that the commercial real estate loan market is facing high levels of volatility in 2022 due to rising rates. No one really knows how high rates will go, but we are hopeful that as the year goes on and sellers adjust their cap rate expectations, more cash flowing deals will be available to commercial real estate lenders and investors.

Multifamily Loan Rates - Detailed

Updated September 27th, 2023

Multifamily Loan Rates Over $6,000,000 Rate* Amortization
5 Year Fixed 6.00% Up to 30 years
7 Year Fixed 5.90% Up to 30 years
10 Year Fixed 5.84% Up to 30 years
  • Tiered pricing from 55% – 80% LTV
  • Simplified underwriting for small balance loans
  • Loan amounts from $6,000,000+
  • Loan to value ratios up to 80% on purchases and 75% on refinances
  • Cash out refinances are acceptable
  • Pricing based on loan-to-value and debt service coverage ratio:
    • Tier 2 - 75-80%/1.25x
    • Tier 3 - 65%/1.35x
    • Tier 4 – 55%/1.55x
  • Interest only loans are available
  • Step down and yield maintenance prepayment penalties
  • Nonrecourse loans are available
  • We specialize in multifamily loans and will find the best rates and terms for your specific needs.
  • Multifamily Loan Rates Under $6,000,000 Rates* Amortization
    5 Year Fixed 6.31% Up to 30 years
    7 Year Fixed 6.21% Up to 30 years
    10 Year Fixed 6.10% Up to 30 years
  • Tiered pricing from 55% – 80% LTV
  • Simplified underwriting for small balance loans
  • Loan amounts from $1,500,000 - $6,000,000, up to $7,500,000 in large markets
  • Loan to value ratios up to 80% on purchases and 75% on refinances
  • Cash out refinances are acceptable
  • Pricing based on loan-to-value and debt service coverage ratio:
    • Tier 2 - 75-80%/1.25x
    • Tier 3 - 65%/1.35x
    • Tier 4 – 55%/1.55x
  • Interest only loans are available
  • Step down and yield maintenance prepayment penalties
  • Nonrecourse loans are available
  • We specialize in multifamily loans and will find the best rates and terms for your specific needs.
  • Commercial Mortgage Rates - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    3 Year Fixed 7.04% Up to 25 years
    5 Year Fixed 6.82% Up to 25 years
    7 Year Fixed 6.82% Up to 25 years
    10 Year Fixed 6.76% Up to 25 years
  • Up to 75% LTV
  • Simplified underwriting for small balance loans
  • Loan amounts from $1,500,000
  • Loan to value ratios up to 75%. 
  • Loan to value ratios up to 90% on SBA deals (owner/user commercial properties)
  • Step down and yield maintenance prepayment penalties
  • Nonrecourse loans are available
  • CMBS Rates - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    10 Year Fixed 7.06%-7.66% Up to 30 years
  • Up to 75% LTV
  • Loan amounts from $2 million and up
  • Loans available for apartment buildings, retail shopping centers, office buildings, warehouses and hospitality
  • Loan to value ratios up to 75% on purchases and refinances
  • Cash out refinances are acceptable
  • Interest only loans are available
  • Loans are non-recourse
  • NNN Lease - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    3 Year Fixed 6.84% Up to 30 years
    5 Year Fixed 6.62% Up to 30 years
    7 Year Fixed 6.62% Up to 30 years
    10 Year Fixed 6.56% Up to 30 years
  • Up to 75% LTV
  • Credit tenants such as Walgreen’s, CVS, AutoZone, Panera Bread, etc.
  • Up to 75% LTV for purchases and refinances
  • Cash out available
  • Low step-down prepayment penalties
  • Loan terms up to remaining lease term
  • Fannie Mae Small Balance Apartment - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    5 Year Fixed 6.31%-7.06% Up to 30 years
    7 Year Fixed 6.21%-6.99% Up to 30 years
    10 Year Fixed 6.10%-6.89% Up to 30 years
    15 Year Fixed 6.34%-7.08% 30 years
    30 Year Fixed 6.26%-6.99% 30 years
  • Tiered pricing from 55% – 80% LTV
  • Simplified underwriting for small balance loans
  • Loan amounts from $1,500,000 - $6,000,000
  • Loan to value ratios up to 80% on purchases and 75% on refinances
  • Cash out refinances are acceptable
  • Pricing based on loan-to-value and debt service coverage ratio:
    • Tier 2 - 75-80%/1.25x
    • Tier 3 - 65%/1.35x
    • Tier 4 – 55%/1.55x
  • Interest only loans are available
  • Step down and yield maintenance prepayment penalties
  • Nonrecourse loans are available
  • Additional Fannie Mae Small Balance Apartment Loan Information
  • Fannie Mae Large Balance Apartment - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    5 Year Fixed 6.00%-6.75% Up to 30 years
    7 Year Fixed 5.90%-6.62% Up to 30 years
    10 Year Fixed 5.84%-6.59% Up to 30 years
    15 Year Fixed 6.05%-6.69% 30 years
    30 Year Fixed 5.96%-6.67% 30 years
  • Tiered pricing from 55% – 80% LTV
  • Simplified underwriting for small balance loans
  • Loan amounts from $6,000,000+
  • Loan to value ratios up to 80% on purchases and 75% on refinances
  • Cash out refinances are acceptable
  • Pricing based on loan-to-value and debt service coverage ratio:
    • Tier 2 - 75-80%/1.25x
    • Tier 3 - 65%/1.35x
    • Tier 4 – 55%/1.55x
  • Interest only loans are available
  • Step down and yield maintenance prepayment penalties
  • Nonrecourse loans are available
  • Additional Fannie Mae Large Balance Apartment Loan Information
  • Freddie Mac Small Balance Apartment - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    5 Year Fixed 6.69% Up to 30 years
    7 Year Fixed 6.65% Up to 30 years
    10 Year Fixed 6.64% Up to 30 years
  • Tiered pricing from 55% – 80% LTV
  • Simplified underwriting for small balance loans
  • Loan amounts from $1,500,000 - $6,000,000, up to $7,500,000 in large markets
  • Loan to value ratios up to 80% on purchases and 75% on refinances
  • Cash out refinances are acceptable
  • Pricing based on loan-to-value and debt service coverage ratio:
    • Tier 2 - 75-80%/1.25x
    • Tier 3 - 65%/1.35x
    • Tier 4 – 55%/1.55x
  • Interest only loans are available
  • Step down and yield maintenance prepayment penalties
  • Nonrecourse loans are available
  • Additional Freddie Mac SBL Information
  • Bank Apartment Mortgage - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    5 Year Fixed 6.75%-7.00% Up to 30 years
    7 Year Fixed 6.75%-7.25% Up to 30 years
    10 Year Fixed 6.75%-7.25% Up to 30 years
  • Tiered pricing from 55% – 80% LTV
  • Simplified underwriting for small balance loans
  • Loan amounts from $1,500,000 - $10,000,000+ Nationwide
  • Loan to value ratios up to 80% on purchases and 75% on refinances
  • Cash out refinances are acceptable
  • Pricing based on loan-to-value and debt service coverage ratio:
    • Tier 2 - 75-80%/1.25x
    • Tier 3 - 65%/1.35x
    • Tier 4 – 55%/1.55x
  • Interest only loans are available
  • Step down and yield maintenance prepayment penalties
  • Nonrecourse loans are available
  • CMBS Multifamily - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    10 Year Fixed 7.06%-7.66% Up to 30 years
  • Up to 75% LTV
  • Loan amounts from $2 million and up
  • Loans available for apartment buildings, retail shopping centers, office buildings, warehouses and hospitality
  • Loan to value ratios up to 75% on purchases and refinances
  • Cash out refinances are acceptable
  • Interest only loans are available
  • Loans are non-recourse
  • Multifamily Bridge

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    Owner Occupied Commercial Mortgage Rates - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    3 Year Fixed 6.94% Up to 30 years
    5 Year Fixed 6.72% Up to 30 years
    7 Year Fixed 6.72% Up to 30 years
    10 Year Fixed 6.66% Up to 30 years
  • Up to 80% LTV
  • Step-down prepayment penalties
  • Loan to value ratios up to 80%, 90% with SBA
  • Loans from $1,500,000 and up
  • 51% or more of the property to be owner occupied
  • Small Business Administration (SBA) - Detailed

    Updated September 27th, 2023

    Loan Product Rate* Amortization
    Adjustable 8.50%-10.50% Up to 25 years
    5 Year Fixed 8.50%-10.50% Up to 25 years
  • Up to 90% LTV, 100% possible
  • Loans for the purchase or refinance of owner occupied properties
  • Relaxed income and credit qualifying guidelines
  • Capital available for working capital, equipment, and accounts receivable
  • Loans up to 90% LTV (100% for certain professional businesses)
  • Loans from $1,500,000+