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Thursday, 17 January 2019

Kroll Bond Rating Agency: Spiking Interest Rates Could Slow Lending Volumes

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We recently asked each of the CMBS rating agencies to outline what their biggest concerns might be in the event interest rates increase over the coming year. We're publishing their responses, which also appear in our Year-End magazine. For an electronic version of the magazine, please email

By Larry Kay

Recent headlines have indicated that the Federal Reserve is weighing a wait-and-see approach to raising rates following an accommodative monetary policy over the last few years.

Despite this, wage pressures have started to appear, which could trigger higher inflation and force the Fed's hand. This, as well as the Fed's quantitative tightening, will eventually lessen demand for commercial real estate assets. When this might occur is an open question, however, as we are in the late stages of the commercial real estate cycle and no one will ring the bell when it ends. In addition, as long as the interest rate movement is gradual and properly guided, investors can position themselves to adapt and adjust their investment posture.

In regard to 10-year, fixed-rate loan...

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Dan Moynihan

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