The Impact of Inflation on CRE Lending


The Impact of Inflation on CRE Lending

2023-12-11 16:33:33

However, inflation can also create opportunities for commercial borrowers.

Here are some of the positive presumptions of inflation on commercial lending and things to consider:

1. Interest Rates and Costs – During inflation lenders may charge higher interest rates to maintain their compensation, which can create favorable real interest rates for the borrowers.

There will be a decrease in borrowing costs which means commercial borrowers can access lower borrowing costs in real terms, which provides cost savings and investment opportunities.

2. Debt Devaluation – During inflation the value of money disintegrates over time, which is favorable to borrowers who have fixed-rate loans.

The value of principal and future interest rates will decline as inflation increases.

3. Appreciation of Asset-Value – Inflation contributes an appreciation of value on commercial properties. Which means commercial real estate investors can benefit from the value appreciation and can also secure additional financing.

Commercial lenders may provide more loans that allow commercial real estate to obtain capital based on the increased value of the collateral.

While inflation faces some challenges in some businesses such as commercial real estate, it also has positive effects for commercial borrowers. But it’s important to understand to assess the risks associated with inflation, and the long-term implications to obtain commercial loans.

It’s always best to consult with a lender that specializes in commercial real estate lending. With the fast closing rate as long as 2 weeks and you can get your funds in just 48 hours! Century Capital will definitely be here to provide you with the best services. To know everything about Century Capital Reach Victor Cohen at 201-880-7850 ext 102 or send an email to