Adam Lervik, one of my favorite commercial lending partners in Whatcom County, and a commercial banking officer at Bank of the Pacific (BOP), recently shared some resources for tracking commercial real estate lending rates in the area.
BOP most frequently uses the Seattle Federal Home Loan Bank (“FHLB”) 5-year base rate as a starting point. They then add a margin of 2.75% – 3.25% on top of that base rate, depending on the perceived risk in the loan. Perceived risk includes such factors as vacancy rate, debt coverage ratio, and loan to value. The link above takes you to the rate sheet Adam follows, which is updated daily.
As an example of this, let’s say the commercial base rate for a specific date in July 2014 was 2.09%. Adding in BOP’s margin of 2.75% to 3.25% to that base rate yields a range of interest rates between 4.84% to 5.34% for that date.
These rates move closely with the treasury bond market, so you can also look at changes in the 3, 5, and 10-year treasury market to see how commercial rates are moving. Bond prices move inversely to yield, so when you see the graphs trending upward, that means interest rates are moving downward and vice versa.
BOP also utilizes the SBA 504 loan program frequently to finance properties that are greater than 50% owner occupied. SBA 504 loan rates are only determined once per month.