10 lowest commercial real estate loan rates in 2020

The lowest rate that we have secured for our client in 2020 was 3.5%.

In 2020, commercial real estate loan rates were relatively low due to Federal Reserve interventions during the COVID-19 pandemic, which aimed to support the economy by lowering interest rates. Here are some of the lowest commercial real estate loan rates during that period:

1. SBA 504 Loans: Rates for SBA 504 loans were among the lowest, often ranging from 2.5% to 3.5% in 2020, with long-term fixed rates for owner-occupied commercial real estate.​

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2. Fannie Mae and Freddie Mac Multifamily Loans: These agency loans had rates as low as 2.75% to 3.5% for multifamily properties, depending on loan terms and borrower qualifications.

3. Conventional Bank Loans: Banks offered competitive rates for prime borrowers, with interest rates for long-term loans often falling between 3% and 4%, reflecting the low interest rate environment​.

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4. Life Insurance Company Loans: These lenders provided long-term, fixed-rate loans for commercial real estate at rates between 2.75% and 4%, particularly for high-quality assets.​

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5. Credit Unions: Known for slightly better rates due to their not-for-profit status, credit unions offered loans with interest rates starting as low as 3.25% for qualified borrowers.​

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6. CMBS (Commercial Mortgage-Backed Securities) Loans: CMBS loans had rates in the range of 3.5% to 4.25%, depending on property type and risk.

7. Bridge Loans: Bridge loans, typically higher in cost, were available in the 5% to 7% range in 2020, which was lower than in previous years due to favorable market conditions​.

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8. Hard Money Loans: Some hard money lenders offered rates as low as 7% to 9% for short-term, higher-risk commercial real estate loans, though these loans were typically more expensive.

9. Mezzanine Financing: Mezzanine financing rates in 2020 ranged from 6% to 9%, depending on the borrower’s credit and the project risk level.

   
   

10. Construction Loans: Despite being typically higher, construction loans saw rates in the 4.5% to 6% range for well-capitalized projects.

    
    

Overall, 2020 saw some of the lowest commercial real estate loan rates in recent history due to the economic response to the pandemic and the Federal Reserve's low interest rate policy.

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