Understanding Today’s Commercial Real Estate Interest Rates

Commercial real estate interest rates play a pivotal role in shaping investment decisions, financing strategies, and long-term returns. Whether you’re purchasing a retail space, refinancing an office building, or developing a multifamily property, understanding how these rates are determined—and what influences their movement—can give you a significant edge. From lender requirements and loan types to market trends and Federal Reserve policies, having a clear grasp of the landscape helps ensure smarter, more strategic moves in a competitive environment.

Loan Type	Current Rate Range (June 2025)
Conventional	5.87% – 10.50%
SBA 504	6.55% – 6.93%
CMBS	5.88% – 7.49%
Bridge	6.50% – 14.50%
Construction	10.00% – 15.00%
Multifamily (>$6M)	As low as 5.45% (10-year fixed)

Commercial real estate financing has become a complex landscape to steer in 2025. With the Prime Rate at 8.5% (the highest in over 20 years) and ongoing market volatility, investors and property owners face critical decisions about when and how to secure financing.

Interest rates for commercial properties are calculated differently than residential loans. While your home mortgage might be quoted as a simple percentage, commercial loans typically use a formula:

Commercial Rate = Index + Spread

The index is usually a benchmark like the 10-year Treasury (currently at 4.22%), SOFR, or Prime Rate. The spread is the lender’s markup based on your risk profile and the property type.

My name is Matt Morgan, a licensed California Real Estate Salesperson with extensive experience helping clients steer commercial real estate interest rates since beginning my career with IPA in 2008. Over the years, I’ve guided investors through multiple rate cycles, specializing in retail and office properties throughout the Inland Empire.

Commercial Real Estate Interest Rates Snapshot for 2025

As we move through 2025, the commercial lending landscape continues to evolve following the Federal Reserve’s initial rate cuts in late 2024. Currently, we’re seeing a significant disconnect between short-term and long-term rates that’s creating both challenges and opportunities for commercial real estate investors.

The most critical numbers to know right now:

• Prime Rate: 8.5% (highest in over 20 years)
• 10-Year Treasury: 4.22% (as of June 2025)
• 5-Year Treasury: 3.99%
• SOFR 30-day index: 5.33%

These benchmark rates form the foundation for most commercial real estate loans. However, the actual rates you’ll pay depend significantly on loan type, property characteristics, and your qualifications as a borrower.

One of the most pressing concerns for investors today is the looming $1.2 trillion “maturity wall” of commercial mortgages coming due in 2025-2026. The average interest rate on these maturing loans is estimated at 4.91% for 2025 maturities, significantly lower than current refinancing options above 6.0%.

Speaking of cap rates, the spread between cap rates and the 10-year Treasury has averaged 314 basis points from 1991 to 2024. This historical relationship provides a useful benchmark for evaluating current market conditions and future trends.

Loan Type	Commercial Rate	Residential Rate	Key Differences
Conventional	5.87% – 10.50%	5.25% – 6.50%	Shorter terms, balloon payments common
Fixed-Rate	5.75% – 7.50%	5.25% – 6.25%	5-10 year terms vs. 15-30 year residential
Adjustable	SOFR + 2.75% – 4.50%	SOFR + 2.25% – 3.00%	Higher margins, more frequent adjustments
Construction	10.00% – 15.00%	6.50% – 8.00%	Interest-only during construction

Why 2025 Rates Look This Way

The current rate environment stems from several key factors:

First, the Federal Reserve’s aggressive tightening cycle that began in March 2022 took the Fed Funds rate from near zero to 5.25%-5.50%, the most restrictive monetary policy since the early 1980s. While the Fed began cutting rates in September 2024, with a cumulative 100 basis point reduction by the end of that year, the pace of cuts has been slower than many market participants anticipated.

Second, persistent inflation has kept pressure on rates. The Personal Consumption Expenditures (PCE) index—the Fed’s preferred inflation measure—has remained between 2.6% and 2.8% since May 2024, still above the Fed’s 2% target.

Third, strong job growth has surprised economists. December 2024 saw 256,000 new jobs, the largest monthly increase since March, and the unemployment rate fell from 4.2% to 4.1%.

The yield curve, which had been inverted (short-term rates higher than long-term rates) for much of 2023-2024, is beginning to normalize. This typically signals economic expansion ahead, but the transition period creates volatility in commercial mortgage pricing.

For the most current Treasury yield data, you can visit the United States Treasury website, and for the latest Federal Reserve policy decisions, check the FOMC press releases.

Key Drivers of Commercial Loan Pricing

When you’re shopping for a commercial mortgage, understanding what drives your commercial real estate interest rate can save you thousands—maybe even millions—over the life of your loan. Unlike home loans, commercial financing considers a much broader range of factors, and knowing these can give you a real edge in negotiations.

The fundamental formula that determines your rate is refreshingly simple:

Commercial Loan Rate = Index + Spread

Let’s break this down into plain English.

Benchmark Indices

Think of the index as the foundation of your rate—the starting point before a lender considers your specific situation. The most common benchmarks include:

SOFR (Secured Overnight Financing Rate) has largely replaced LIBOR for floating-rate loans. It’s based on actual transactions in the Treasury repurchase market, making it more transparent and reliable.

Prime Rate, currently sitting at 8.5%, is often used for SBA loans and lines of credit. This is the rate banks offer their most creditworthy customers.

Treasury Yields, particularly 5-year and 10-year Treasuries, serve as the benchmark for most fixed-rate commercial loans. These reflect what investors demand to lend money to the U.S. government.

Swap Rates are commonly used for CMBS and life company loans. These represent the fixed rate that banks are willing to exchange for a floating rate.

Each lender chooses a benchmark that aligns with their own funding sources. Once they’ve selected the index, they add their spread—and that’s where things get interesting.

What Determines Your Spread?

The spread is where lenders account for risk and build in their profit. It’s also where you have the most room to negotiate. Here’s what affects your spread:

Your property’s Debt Service Coverage Ratio (DSCR) measures its ability to pay its debts. A DSCR of 1.25 or higher typically gets the best rates—meaning your property generates at least $1.25 in income for every $1 in debt payments.

The Loan-to-Value Ratio (LTV) represents how much you’re borrowing compared to the property’s value. Lower is better from the lender’s perspective. As one lender told me recently, “Every 5% reduction in LTV can save you 25-50 basis points in rate.” That’s real money! Learn more about Loan-to-Value Ratio and how it affects your financing options.

Borrower strength matters enormously. Lenders look at your credit score (720+ preferred), net worth (ideally exceeding the loan amount), liquidity (6-12 months of debt service in reserves), and your track record managing similar properties.

Loan size affects pricing due to economies of scale. As a banker explained to me last month, “A $10 million loan doesn’t cost us ten times more to originate than a $1 million loan.” Larger loans often secure better rates.

Property quality and location significantly impact your rate. Class A properties in primary markets command the lowest spreads, while Class C properties in smaller markets pay premium rates.

I recently worked with a client in Riverside who received quotes varying by over 100 basis points from different lenders for the same property. Each lender weighed these factors differently, highlighting why shopping your loan to multiple sources is so important.

Federal Reserve & Treasury Influence on Commercial Real Estate Interest Rates

The relationship between Fed policy and commercial real estate interest rates isn’t as straightforward as many borrowers think. Here’s what you need to know:

When it comes to short-term versus long-term rates, there’s an important distinction. The Federal Reserve directly controls the federal funds rate, which primarily influences short-term borrowing costs. This immediately impacts floating-rate loans tied to Prime or SOFR, construction loans, bridge financing, and lines of credit.

However, long-term fixed rates (5, 7, and 10-year commercial mortgages) are more closely tied to Treasury yields. These are determined by market forces including inflation expectations, economic growth forecasts, global demand for U.S. debt, and federal government borrowing needs.

This explains those head-scratching moments when the Fed cuts rates, yet long-term mortgage rates actually increase. As a capital markets expert explained to me, “The Fed can cut the short end of the curve, but if the market expects higher inflation or more Treasury issuance, long-term rates can still rise.”

Policy lag effects create interesting timing opportunities. Research shows that Fed rate changes typically take 12-24 months to fully impact commercial real estate values and transaction volumes. Public REITs tend to respond more quickly (about 13 months after the first rate cut), while private market values lag by approximately 20 months.

Understanding where we are in this cycle can create strategic advantages for informed investors.

Property Type & Market Fundamentals

Not all commercial properties are created equal in the eyes of lenders. Here’s how different sectors are being viewed in 2025:

Multifamily properties are currently the golden child, commanding the lowest rates due to steady demand and stable cash flows. Lenders are offering rates as low as 5.45% for 10-year fixed loans on properties over $6 million. Fannie Mae and Freddie Mac continue providing liquidity, though with slightly tighter underwriting standards than in previous years.

Industrial properties remain strong performers, driven by e-commerce and logistics demand. They typically secure rates about 25-50 basis points higher than multifamily. New construction projects are still securing favorable construction-to-permanent financing terms.

Retail properties show a widening spread in rates between grocery-anchored centers (lower) and non-essential retail (higher). Lenders are scrutinizing tenant mix, lease terms, and sales performance more carefully than ever. Properties with significant tenant rollover in the next 2-3 years face higher equity requirements.

Office properties face the most challenges, with vacancy rates reaching one-fifth of total space in Q1 2025. Lenders are applying significant rate premiums, particularly for Class B and C properties. Some lenders have essentially exited this space except for trophy assets or medical office buildings.

Hospitality properties typically command rates 75-150 basis points higher than multifamily due to operational risk. While performance has rebounded, financing remains conservative. SBA loans often represent the most competitive option for smaller properties.

The relationship between interest rates and cap rates is particularly important to understand. As one of my regular investors noted, “In a rising rate environment, cap rates eventually follow, but there’s usually a lag period where returns get compressed.”

This cap rate compression is particularly evident in our local Inland Empire market, where strong fundamentals have kept investor demand high despite rising borrowing costs. For more insights on our local market dynamics, check out our detailed analysis of Inland Empire Commercial Real Estate.

Rates by Loan Product and Property Category

The world of commercial real estate financing feels a bit like a buffet with too many options – overwhelming at first glance, but exciting once you understand what’s available. Each loan product comes with its own unique flavor of rates and terms, and knowing the differences can save you thousands (or even millions) in the long run.

Commercial Real Estate Interest Rates for Permanent Loans

Permanent loans are the workhorses of commercial real estate – they provide stable, long-term financing for properties that are already up and running smoothly. As of June 2025, here’s what the landscape looks like:

If you’re working with a local bank or credit union on a conventional loan, expect rates between 5.87% and 10.50%. These typically come in 5, 7, or 10-year terms with longer 25-30 year amortization schedules. Banks usually want to see up to 75-80% LTV for multifamily and slightly less (70-75%) for other property types. The trade-off for sometimes better rates? Full recourse with personal guarantees. These work beautifully if you have strong financials and local properties.

Life company loans often fly under the radar but offer some of the most competitive rates around – currently 4.34% to 7.59%. With terms stretching from 5 to 25 years and matching amortization, they’re ideal for lower leverage, high-quality properties in primary markets. The cherry on top? Non-recourse options are frequently available.

Looking for a CMBS (Conduit) loan? Current rates range from 5.88% to 7.49%, typically with 10-year terms and 30-year amortization. These non-recourse options (with standard carve-outs) work best for larger properties over $5 million.

For multifamily investors, Agency loans through Fannie Mae and Freddie Mac remain a go-to choice with rates between 5.45% and 7.00%. These offer 5-10 year terms, 30-year amortization, and the possibility of non-recourse financing for properties with 5+ units.

Business owners should consider SBA 504 loans with current rates of 6.55% to 6.93%. These fully-amortizing loans (10, 20, or 25 years) allow up to 90% LTV for owner-occupied properties, though personal guarantees are required.

I recently helped a client secure a 7-year fixed rate loan at 6.25% for a multi-tenant retail center right here in Riverside. The deal featured a comfortable 25-year amortization and 75% LTV through a regional bank that valued both the strong tenant mix and our client’s existing banking relationship.

Commercial Real Estate Interest Rates for Short-Term & Specialty Financing

Sometimes you need financing that’s a bit more specialized – that’s where these options come in:

When you need to move quickly or reposition a property, bridge loans offer solutions with rates from 6.50% to 14.50%. These short-term options (1-3 years, typically interest-only) allow up to 75-80% LTV and come in both recourse and non-recourse flavors.

Building from the ground up? Construction loans currently run between 10.00% and 15.00%. These 18-36 month loans feature interest-only payments during construction and typically cover up to 65-75% of project costs. They almost always require full recourse, so be prepared to stand behind your project.

Need to bridge the gap between senior debt and available equity? Mezzanine financing might be your answer, with rates from 8.00% to 9.00%. These 1-5 year instruments can push your combined LTV (with senior debt) up to 85-90%.

For shorter-term renovation projects, fix & flip loans offer rates from 7.00% to 8.00% with terms from 6-24 months. They’ll typically cover up to 70-75% of after-repair value but require full recourse.

How Property Type Shifts the Rate

In commercial real estate, not all properties are created equal – at least not in the eyes of lenders. Here’s how different property types affect your commercial real estate interest rates:

Multifamily properties (5+ units) are the golden children of commercial real estate, commanding the lowest rates (5.45% to 7.00% for 10-year fixed) due to their perceived lower risk. The availability of agency financing through Fannie Mae and Freddie Mac helps keep these rates competitive.

Industrial properties aren’t far behind, with strong fundamentals and e-commerce trends supporting favorable rates between 5.65% and 7.25% for 10-year fixed loans. Warehouse and logistics facilities are particularly favored in today’s market.

Retail properties see much wider rate variation based on tenant quality and lease structure. Grocery-anchored and necessity retail secure better rates, with the overall range spanning from 5.85% to 7.75% for 10-year fixed financing.

Office properties are currently facing the toughest scrutiny, with rate premiums reflecting market uncertainty. Expect rates between 6.25% and 8.50% for 10-year fixed loans, though medical office and government-leased properties fare considerably better.

Hospitality properties carry the highest perceived risk among major property types, often requiring specialized lenders and commanding rates from 6.75% to 9.00% for 10-year fixed loans.

Self-storage facilities have gained growing acceptance among lenders due to their stable performance through economic cycles, with rates typically ranging from 5.75% to 7.50% for 10-year fixed financing.

Short-Term vs Long-Term Rate Outlook Through Q4 2025

If you’re wondering where commercial real estate interest rates are headed for the rest of 2025, you’re not alone. This is one of the most common questions I hear from investors trying to time their financing decisions. Based on what we’re seeing in economic indicators and market forecasts, here’s my take on what to expect:

Short-Term Rate Outlook (Next 6 Months)

The Fed isn’t done yet. We’re expecting another 1-2 rate cuts of 25 basis points each before the end of 2025. What does this mean for you? If you’re looking at floating-rate loans tied to SOFR or Prime, you should see your rates gradually drift lower through the end of the year.

That said, don’t expect a smooth ride. Economic data releases and inflation readings have been all over the place lately, which means we’ll likely see continued volatility in the short-term rate markets.

Long-Term Rate Outlook (6-12 Months)

For longer-term fixed rates, things are a bit different. The 10-year Treasury yield (the benchmark for most fixed-rate commercial mortgages) will likely hover between 3.75% and 4.50% for the remainder of the year. We’re seeing signs that long-term fixed rates are beginning to stabilize as the yield curve returns to a more normal shape.

There’s a silver lining here too – as lenders compete more aggressively for deals, we’re seeing some compression in the spreads over Treasury benchmarks. This means you might get a slightly better deal even if the underlying index doesn’t move much.

I was talking with Sarah Johnson, a financial analyst I respect, who put it this way: “We’re entering a period where short-term rates are falling faster than long-term rates. This creates a strategic opportunity for borrowers to secure floating-rate debt now with plans to convert to fixed-rate once long-term rates begin to decline more significantly.”

The Looming Maturity Wall

There’s a $1.2 trillion elephant in the room that we need to talk about. That’s the approximate value of commercial mortgages maturing during 2025-2026. The average rate on these expiring loans is 4.91% for those maturing in 2025 and 4.59% for 2026 maturities.

Here’s the challenge: new mortgage rates are exceeding 6.0%, creating a significant gap. For many property owners, this means facing negative leverage – where debt costs exceed cap rates. I’m already seeing this play out with clients who are:

• Scrambling to find additional equity to inject at refinancing
• Looking at bridge and mezzanine financing to fill gaps
• In some cases, considering selling properties they can’t refinance

If you’ve got capital available, this environment will likely create some interesting buying opportunities, especially in office and retail where refinancing challenges are most severe.

Hedging & Risk Management Strategies

With rates bouncing around like they are, smart investors are implementing hedging strategies. Here are some approaches worth considering:

Interest rate caps can set a ceiling on your floating rate, typically costing 1-3% of the loan amount depending on the strike price and term. These work beautifully for bridge loans and construction financing.

Interest rate swaps let you convert floating-rate debt to a synthetic fixed-rate. There’s no upfront premium, but you’ll need to commit to the full term. These make sense for longer-term holdings with stable cash flow.

Forward rate locks allow you to secure today’s rates for future funding (usually 30-180 days out). This might involve a premium or rate adjustment but can be worth it for acquisitions with extended closing timelines.

Laddered maturities across your portfolio can reduce refinancing risk. By staggering loan due dates and diversifying across lenders and loan types, you avoid having everything come due at once. This works well for larger portfolios.

Prepayment analysis becomes critical when rates start to drop. Understanding the cost of prepayment penalties versus potential savings from refinancing can lead to significant long-term savings.

I recently worked with a client on a $12 million acquisition in the Inland Empire who implemented a smart hedging strategy. They secured a floating-rate loan at SOFR + 2.75% but purchased a rate cap limiting their maximum rate to 7.5%. This gave them both protection if rates spike and the flexibility to benefit when rates fall – the best of both worlds.

For more detailed information on how changing interest rates affect commercial real estate investments, take a look at our analysis: Understanding the Impact of Interest Rate Cuts on Commercial Real Estate.

Borrower Playbook: Securing the Best Commercial Mortgage Rate

Let’s face it – nobody wants to pay more interest than they have to. After helping hundreds of clients secure financing over the years, I’ve seen what separates those who get the best commercial real estate interest rates from those who don’t.

Think of your loan application like a first date with a potential lender. You want to put your best foot forward, right? Here’s how to make lenders compete for your business:

Strengthen Your Borrower Profile

Your personal financial strength matters tremendously. Lenders love borrowers with credit scores above 720, and they practically roll out the red carpet when your net worth equals or exceeds the loan amount. One banker recently told me, “We want to lend to people who don’t actually need the money.” Keeping 6-12 months of debt service in liquid reserves shows lenders you’re prepared for rainy days, and documenting your track record with similar properties builds their confidence in your abilities.

Optimize Your Property Metrics

Properties that shine on paper get the best rates. Aim for a Debt Service Coverage Ratio (DSCR) of at least 1.25 for most properties (1.15+ for multifamily). The lower your Loan-to-Value (LTV), the better your rate – I’ve seen clients save 25-50 basis points for each 5% reduction in LTV. Stable tenancy matters too; lenders get nervous about properties with significant lease expirations in the first few years of the loan.

Strategic Loan Structuring

Size matters in commercial lending. Loans over $1 million typically access better pricing simply due to economies of scale. Match your loan term to your investment horizon, and consider whether providing personal guarantees makes sense for your situation – it often leads to better pricing. The right prepayment structure can save you thousands if you exit earlier than planned.

Just last month, a client of mine in Riverside secured a rate that was 35 basis points below initial quotes by implementing these strategies. The game-changer? Demonstrating exceptional liquidity and bringing additional banking relationships to the table. As he told me afterward, “I never realized how much room there was to negotiate until you showed me how to leverage competing offers.”

For more fundamental guidance on investment strategies, check out our guide on Commercial Property Investing Explained Simply.

Checklist of Documents & Qualifications

Being prepared with the right documentation doesn’t just streamline the process – it signals to lenders that you’re a professional who takes this seriously. Here’s what you’ll need:

For you and your business:

• Personal Financial Statement (PFS) for all guarantors
• Schedule of Real Estate Owned (SREO) showing your portfolio
• Last 2-3 years of personal and business tax returns
• Entity formation documents (Articles of Organization, Operating Agreement)
• Resume highlighting your real estate experience

For the property:

• Current rent roll with lease details
• Trailing 12-month operating statements (T-12)
• Current year budget and proforma
• Copies of all existing leases
• Service contracts and property tax bills
• Property condition assessment and environmental reports

For the transaction:

• Purchase agreement (for acquisitions) or existing loan documents (for refinances)
• Recent appraisal (if available)
• Title report and survey
• Construction budget and plans (for development projects)

I can’t stress enough how much a complete package matters. As one loan officer I work with regularly says, “When I get a carefully organized loan package, I immediately think: ‘This borrower will be a dream to work with.’ That goodwill translates directly into better terms.”

Special Programs That Lower Commercial Real Estate Interest Rates

There are several “hidden” programs that can significantly reduce your commercial real estate interest rates if you qualify. These are some of my favorites:

The SBA 504 program is a gem for owner-occupied properties, offering up to 90% LTV financing with below-market fixed rates on 40% of the project. With current rates between 6.55% and 6.93% and fully-amortizing terms of 10, 20, or 25 years, it’s hard to beat for the right situation.

If your property is in a smaller community (under 50,000 population), the USDA Business & Industry Loan Program might be your secret weapon. It allows up to 80% LTV with government guarantees that reduce lender risk and improve your terms. Current rates typically range from 5% to 7%.

For multifamily investors, HUD/FHA programs like 223(f) for existing properties or 221(d)(4) for new construction offer incredibly favorable terms – up to 85% LTV and 40-year amortization with non-recourse financing.

Don’t overlook relationship banking benefits. Many banks offer rate discounts of 0.25% to 0.50% for existing customers. Bank of America’s Preferred Rewards program is just one example where your deposit balances can directly reduce your loan rate.

Military service can pay dividends too. Some lenders offer fee discounts up to 25% for veterans, which can mean significant savings on origination or administration costs.

Green buildings aren’t just good for the planet – they’re good for your wallet too. Energy-efficient properties may qualify for rate reductions of 10-25 basis points through programs from Fannie Mae, Freddie Mac, and various banks.

I recently helped a veteran business owner combine SBA 504 financing with a veteran fee discount for his industrial property in Corona. The structure allowed 90% financing, and his veteran status knocked 25% off the already-low SBA fees. His reaction when we closed? “I wish I’d known about these programs years ago – I would have expanded much sooner.”

For more information about analyzing your loan-to-value options, see our detailed guide on Loan-to-Value Ratio (LTV).

Frequently Asked Questions about Commercial Real Estate Interest Rates

What are the average commercial real estate interest rates right now?

If you’re looking at the commercial real estate landscape in June 2025, you’ll find quite a range when it comes to commercial real estate interest rates. They currently span from 5.38% to 15.00% – a pretty wide spread that reflects just how diverse commercial financing options can be.

Let me break this down a bit more specifically:

Conventional loans are sitting between 5.87% and 10.50%, while SBA 504 loans offer a tighter range at 6.55% to 6.93%. If you’re considering CMBS financing, expect rates around 5.88% to 7.49%. Bridge loans command higher rates from 6.50% up to 14.50%, and construction loans top the chart at 10.00% to 15.00%.

“The rate you’ll actually get depends on much more than just the loan type,” explains Mark Chen, a lender I’ve worked with for years. “It’s like putting together a puzzle where every piece matters.”

Those pieces include your property type, its location, your loan-to-value ratio, the debt service coverage ratio, and of course, your qualifications as a borrower. Multifamily properties typically get the sweetest deals – I’ve seen loans over $6 million lock in rates as low as 5.45% on 10-year fixed terms. But if you’re financing something more specialized like a hotel, prepare to pay a premium of 100-150 basis points higher due to the operational complexity.

How do commercial mortgage rates compare to residential rates?

I get this question all the time from first-time commercial investors. The short answer: commercial rates are almost always higher than residential rates, and they’re structured quite differently.

There are several good reasons for this difference. Commercial properties come with more complex income streams and operational considerations, which naturally increases the lender’s risk. While your home mortgage likely offers a 30-year fixed term, commercial loans typically feature shorter terms of 5, 7, or 10 years with 25-30 year amortization schedules. This creates balloon payments that require refinancing when the term ends.

Another key difference is in the recourse options. Many commercial loans offer non-recourse structures (limited to the property), which naturally command higher rates than the full-recourse residential loans most homeowners have.

As of now, conventional residential mortgage rates hover between 5.25% and 6.50%, while comparable commercial mortgages for strong borrowers with good properties range from 5.87% to 7.50%. The gap gets much wider when we talk about higher-risk commercial assets.

What is the process for locking a commercial mortgage rate and how long does it last?

Rate locks in the commercial world work quite differently than in residential lending, and they vary significantly depending on who’s lending the money.

With bank and credit union loans, you’ll typically lock your rate when you receive the commitment letter or approval. These locks usually last between 30 and 90 days. If your closing gets delayed (which happens more often than anyone would like!), you can often get extensions for a fee – typically about 0.125% per month. I’ve found that relationship lenders may offer longer lock periods without fees if you’ve done business with them before.

For CMBS loans, rate locks generally occur after you’ve received the commitment letter and provided a good faith deposit. Standard lock periods are shorter – just 30-45 days – and extensions can be costly, sometimes exceeding 0.25% per month. Some lenders offer early rate locks at application, but these include a premium.

With agency loans like Fannie Mae or Freddie Mac, you’ll find early rate lock programs available at application if you provide a deposit. These typically offer standard lock periods of 45-60 days. For new construction or renovation projects, forward rate locks can stretch up to 12 months, which provides great peace of mind during longer projects.

For SBA loans, the rate structure is a bit different. The CDC portion (504) rates are set when the debenture is sold, while bank portion rates typically lock at commitment with lock periods generally running 30-60 days.

One commercial mortgage banker I work with regularly shared this advice: “Understanding your lender’s rate lock procedure is crucial. Some lenders lock at application, some at commitment, others just prior to closing. This can significantly impact your rate in volatile markets like we’re seeing now.”

Construction loans follow yet another pattern. Rate locks typically apply only to the initial interest rate since these loans usually have floating rates. However, some lenders offer conversion options to fixed-rate permanent financing once construction is complete.

At IPA Commercial Real Estate, we help our clients steer these complexities to secure the most favorable terms possible for their specific situation.

Why Choose IPA Commercial Real Estate?

At IPA Commercial Real Estate, we’ve built our reputation on helping clients steer these complexities. Our team maintains relationships with dozens of lenders throughout Riverside, the Inland Empire, and Southern California. We know which lenders are hungry for specific property types and which offer the most competitive terms for your unique situation.

Whether you’re eyeing a new acquisition, facing that dreaded refinance, or planning ground-up development, understanding today’s rate environment is crucial to your success. I invite you to explore our available properties and reach out for a conversation about your specific needs.

The financing landscape will continue evolving through 2025 and beyond. Market-monitoring, refinance-planning, and risk-hedging aren’t just buzzwords – they’re essential strategies for thriving in any interest rate environment. With the right approach and experienced guidance, you can position yourself to capitalize on opportunities while others struggle with uncertainty.