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.
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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