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What the Fed Rate Hike Means for CRE Investors

June 20, 2022 by Marcus & Millichap Research Services

What the Fed’s Unexpected Rate Hike Means For CRE Investors

Fed Takes Aggressive Action to Combat Inflation

  • Fed announced 75 bps hike; previously suggested 50 bps
  • Lenders may pass a larger rate to buyers and bake-in another 75 bps increase in July
  • Four more rate hikes are expected in 2022

Housing Market Already Feeling the Impact

  • Average mortgage rates jumped up nearly 50 bps last week to 5.78%
  • Will decrease number of households that can qualify for mortgages
  • Lifts demand for already tight Apartment market; Could translate to greater rent growth pressure

Will Higher Rates Impact CRE Transactions?

  • Some buyers that are dependent on financing may tap out, but enough competition expected to remain
  • Strong rent growth could outweigh higher cost of capital for certain property types and markets

*As of June 16, 2022
Sources: Marcus & Millichap Research Services, Federal Reserve

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Filed Under: Research Brief

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2020 Marcus & Millichap and Limon Net Lease Group

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