Treasuries Drop – Can I rate lock?

The tumble of long-term indexes netted sub-4% coupons for moderately leveraged commercial real estate transactions last week, precipitating a number of inquiries into early rate-locking fully indexed coupons. Traditionally, Life Insurance Companies held the exclusive for locking the full coupon prior to loan approval and/or for any period of time longer than a week. Multiple capital providers including regional banks, agencies (Freddie Mac & Fannie Mae) have entertained the lock at application request but not for periods beyond the 60 day due diligence period. As more capital programs enter the market, we are once again witnessing non-LifeCo rate locks as far forward as 12 months from regional banks, agencies and most recently, Wall Street CMBS executions. An add-on premium of 4 to 6 basis points per month is added to the coupon. Only fully stabilized or nearly stabilized assets are considered for an extensive advance lock position.