Here you can find current 5, 7, & 10 year swap rates, treasuries, and current Libor rates. These are the most common index rates used when pricing commercial real estate financing. When quoting a loan rate to you, a lender will most likely quote a “spread” over one of these index rates.
Below are a couple examples to illustrate how you would calculate a potential loans coupon, using spreads and swap rates, treasuries, or Libor.
- If you are quoting a 10 year fixed rate loan and a 200 spread over the 10 year swap, you would add 2.00% to the 10 year swap rate to arrive at your coupon as of today.
- If you are quoting a 7 year fixed deal, and given a 175 spread over the 7 year swap, you would add 1.75% to the 7 year swap rate to get the current rate.
- If you are quoting a bridge loan, that is 350 over 1 month Libor, you would add 3.50% to the 30 day Libor rate. Keep in mind that these deals will most likely be floating rate products and you will most likely buy an interest rate cap.
These rates are the primary benchmark pricing index for the majority of commercial real estate loans. Products such as CMBS, Fannie Mae, Freddie Mac, life insurance loans, and many bank loans price their interest rates using 5, 7, or 10 year swap rates. Some lenders will price over treasuries rates, however swaps are used much more often. Libor rates are primarily used in floating rate loans and you will see them commonly in bridge financing. Typically 1 month Libor is used to price bridge loans.