29 June 2023
The Federal Reserve’s potential interest rate hike to 6% has triggered worries about variable-rate commercial mortgages. With these mortgages, the interest payment increases in tandem with rising interest rates. This has become a concern as short-term rates have soared, causing mortgage interest payments to double or more. As a result, landlords are struggling to cover the increased costs, leading to defaults and property value declines. The unpredicted rise in rates has exposed the vulnerabilities of variable-rate commercial mortgages.