Q:

How frequently do commercial loan rates change?

A:

Quick Answer

Commercial loan rates change daily due to economic factors such as the Federal Reserve raising the key interest rate at which banks can lend money, according to FederalReserve.gov. If the Federal Reserve raises the federal funds rate, the interest rates on commercial loans rise, which increases borrowing costs.

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Full Answer

As of 2015, many commercial lenders charge consumers higher interest rates than they would on traditional residential loans, explains Investopedia. Lenders secure commercial loans by placing liens on commercial properties, which are not as liquid as residential properties. Therefore, when consumers default on commercial loans, the lenders must recover the loan proceeds by liquidating the property, and commercial properties are difficult to liquidate during an economic downturn.

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