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US commercial lending data appears contradictory at first glance. While borrowing costs continue to rise (according to data from Commercial Loan Analytics, spreads on Sofr-based commercial loans are at their highest level since the mid-2022), commercial loan volumes have started to grow: overall commercial and industrial loan volumes have experienced month-on-month growth for the first time in 12 months.
Gregory Schneider, director of commercial loan analytics at Coalition Greenwich, suggests the rebound in loan volume represents at least a temporary reversal from the contraction of 2023, with an improving economic outlook allowing some banks to loosen their lending policies and giving some companies renewed confidence to borrow.
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One of the reasons why commercial loan volumes in the US have started to grow is acceptance that higher rates are the new normal, says Chris King, co-founder of treasury consultancy Dukes & King.
“Businesses had generally held off from refinancing as the interest-rate curve started to steepen, leading to an even larger refinancing wall,” he explains. “However, as rates have been at an elevated level for over a year now, they have become accustomed to it and budgets are set with higher base rates.”
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