The Fed's First Hike Since 2023 Has Reached Private Lenders' Cost of Capital
The prime rate is at 7%, the 10-year Treasury yield is above 5% and the Fed says more hikes are possible. Here is where the move shows up for private lenders and their borrowers.
Why it matters
- Credit lines priced off prime or SOFR reprice first, squeezing lenders that have not raised their own note rates.
- With the 2-year Treasury yield near 4.9%, investors will ask more of private-loan yields.
- Each half-point rise in takeout rates cuts roughly 5% from a DSCR refinance, which can strand bridge borrowers.
