This summer, the mercury isn’t the only thing that’s rising. As inflation surges to a 40-year high, the Fed hiked interest rates by three-quarters of a percentage point, the biggest single rate hike since 1994.
Before would-be property buyers can catch their breaths and adjust to higher borrowing costs, borrowers should be forewarned that similar rate hikes are expected to occur in July and September. In addition to the tangible impact of higher borrowing costs, the increase in interest rates has contributed to a decrease in trust and confidence among buyers. Many commercial real estate buyers and borrowers have witnessed banks’ actively re-trading deals, resulting in waived contingency periods and lenders pulling out of deals shortly before closing.
What’s a commercial real estate investor to do?
In a word: pivot.
In more words: examine alternative lending sources.
Due to uncertainty caused by higher interest rates, alternative financing sources, including debt funds and private bridge lenders like iBorrow, are playing an ever-increasingly important role as a preferred lender across all commercial property types. Non-bank lenders do not have the issues that traditional banks have and are better able to cope with the current market environment. While banking behemoths move slowly and retrade in order to jockey into better financial positions, alternative lenders offer flexibility, certainty, and closing times that beat banks’ typical 90-day periods.
Even the traditional rate differential offered by traditional and non-traditional lenders has and continues to shrink, with bank rates approaching 6%. Moreover, increased interest in fixed rates has caused indexes like LIBOR and SOFR, which govern floating rates, to soar from 8 bps to 115 bps in 90 days. Since the forward rate curve is now steep, the cost to purchase a rate cap is prohibitively expensive. Lenders that offer fixed rates are eliminating some of this risk for borrowers.
From Irate to iBorrow: The Commercial Real Estate Lending Solution
Rate hikes and irate borrowers go hand-in-hand. While increases and uncertainty continue unabated, iBorrow’s unique approach and benefits enables commercial real estate buyers to proceed with confidence.
iBorrow is a borrower-first lender that has carved its niche by catering to the needs of borrowers. Created for entrepreneurs by entrepreneurs, iBorrow combines institutional-level sophistication with a commitment to delivering fast lending solutions as promised.
“Banks tend to focus on problems,” says iBorrow CEO Brian Good. “We focus on solutions and getting to yes on behalf of our clients.”
iBorrow is known as the most creative, efficient, versatile, and reliable lender in the market. The private lender, which finances all deal types from $3 million to $100 million+, differentiates itself with a host of benefits.
iBorrow offers fixed rates on a non-recourse basis, allowing borrowers to avoid the volatility and uncertainty of the current market.
iBorrow outpaces banks’ closing speed by a considerable amount and with an easier process. “While banks close loans in an average of 90 days, iBorrow closes in two to four weeks–sometimes less,” says Good. “Our simple form document and standard diligence enables us to determine if they can proceed with a loan. If it looks good, we’re able to issue a pre-approved Letter of Intent (LOI), which typically occurs within 24-48 hours of receiving a loan request.”
As a private bridge lender with a track record of more than $1 billion closed loans, iBorrow has the unique ability to fund challenging situations that require creative structures, like loans with structural issues, owner/occupier borrowers, or borrowers facing pending litigation with tailor-made solutions and rapid execution. iBorrow does everything in house and is integrated across origination, asset management, and construction services.
iBorrow has a high loan-to-value ratio of 75%. This willingness to take on greater loan to a given property value is another testament of iBorrow’s entrepreneurial spirit.
Since inception, iBorrow has never missed a funding date. “If we say we can close a loan, we will,” says Good. “This reliability is a cornerstone of our business and why our clients put their utmost trust in us.” iBorrow also doesn’t re-trade loans or reprice loans from the execution of LOI to the closing table.
See Why iBorrow Rates
There’s no crystal ball to determine how high interest rates go or how long the market’s volatility will last. But there is iBorrow.
With a track record over $1 billion, unrivaled reliability, and creative lending solutions, iBorrow offers a real alternative in real estate lending and helps shield borrowers from today’s challenges.
Discover the borrower-first lender. Click below to get started with iBorrow today.