Commercial mortgage rates for permanent financing of commercial real estate properties.
Property types include: retail, office, industrial, multifamily, self-storage, & mobile home parks.

Current Mortgage Rates

Commercial mortgage rates for permanent financing of commercial real estate properties.
Property types include: retail, office, industrial, multifamily, self-storage, & mobile home parks. Commercial loan rates based on loan amounts of $1MM to $10MM. Data updated on May 29th, 2014.

Types / TermsRetailOfficeIndustrialApartmentStorageMHPs
Interest Rate4.44%4.51%4.42%4.31%5.02%4.88%
10-Yr Spread2.792.772.682.573.783.64
Term / Amo6.2 / 258 / 3011.5 / 2420.5 / 276.1 / 289.2 / 25
LTV70%73%70%73%69%70%
DSCR1.41x1.70x1.49x1.43x1.66x1.41x

US AverageMortgage Rates
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Interest Rates & 10-Yr Spread

As a rule of thumb, 10-year commercial mortgage rates are typically about 75 to 150 basis points higher than a 30-year residential mortgage. For example, the chart to the left indicates 30-year current mortgage rates around 4.50%. So, if you’re refinancing today you should expect a commercial mortgage rate for a 10-yr term / 30-yr amortization loan between 5.25% and 6.00%.

Again, this is the approximate interest rate. At the end of the day, lenders’ mortgage rates are a function of the perceived risk for the loan and they use many factors to build their spread into an interest rate.

The LTV & DSCR

Commercial loan rates are also a function of loan-to-value (LTV) and the debt service coverage ratio (DSCR). Featured to the right is a LTV / DSCR matrix for Metlife’s 2011 Commercial Mortgage Portfolio. As you can see, the majority of loans have a loan-to-value above 65% and a debt service coverage ratio above 1.2x.

Over the past few years, DSCR has not been an issue for borrowers because interest rates have been so low. However, LTV has been a constant struggle for owners. From 2004 to 2007, many borrowers refinanced loans up to 80% loan-to-value. Since that time, most properties dropped in value. In return this has affected the present maximum loan amount for their properties.

Commercial Loan Rates - LTV & DSCR