As spreads widened due to the uncertainty caused by Russia/Ukraine war and traces of decelerating growth, overall CRE mortgage activity remains steady with Multifamily, Self-Storage, and Industrial at the top of the list, and Retail, Hotel, and Office continuing to show signs of recovery and growth. The strength of the consumer and the labor market will provide a sturdy tailwind for the economy. Yet, rising interest rates, inflation and geopolitical uncertainty could certainly apply pressure on property valuations. As 10-year Treasury yields climbed back to late 2018 levels and as the Fed begins to raise short-term rates, mortgage rates are likely to continue ascending in Q2.
After a fuming 2021, uncertainty is back in the picture, interest rates are increasing and risks have risen. In highly volatile environments, like the one we are facing today, it is best to focus on the factors you can control. Working with lenders who provide early rate locks, certainty of execution, and greater flexibility can be a valuable tool to mitigate volatility in the financial markets.