On September 16, 2026, the Federal Reserve raised its benchmark rate by a quarter point, from 3.75% to 4%. Mortgage and commercial borrowing costs moved higher with it. If you underwrote a project two or three years ago, the capital around that project is more expensive today than on the day you penciled it. As for where rates go next, fed officials project the benchmark finishing the year between 4.1% and 4.4%, and markets are pricing one more quarter point this year, with further moves considered possible in 2027.
The more important question at this point is how the market is absorbing that change and bracing for what is yet to come. Floating-rate borrowers are seeing resets, while banks are responding with wider spreads, smaller loans, and higher equity requirements. Refinancings take longer and often come in smaller than expected. As a result, good projects are stalling not because the real estate failed, but because the capital behind them repriced.
That shift has created an unusual dynamic for private credit. Our pricing today is roughly where it was before the hikes. Private money has always carried a premium for speed and flexibility, but as bank pricing has risen, that spread has narrowed considerably. On some deals, we may even be the cheaper option.
Our structure is straightforward. Our loans are fixed for the term, so there is no index and no reset letter. On many loans, we also reserve enough interest at closing to carry the project through its non-income-producing period. Most importantly, we underwrite the exit at today's rates, not the rates everyone hopes will return. The takeout lender available at closing may not be there at maturity, and that is a problem better solved on day one than discovered at the finish line.
When a deal needs time, speed is the service. A sale under contract sixty days out against a loan maturing in thirty is a bridgeable gap, and we can step in without waiting on a committee cycle or a thousand investors to weigh in. The answer comes in days, and the deal keeps moving. In a shifting refinancing market, that speed can be the difference between finishing and stalling.
So, the picture is simple. Rates are higher, capital is tighter, and much of the market is playing defense. Our answer is a structure built around fixed pricing, interest reserves, exits underwritten at today's numbers, and decisions delivered in days rather than quarters. We have lent through more than one cycle this way, and the approach does not change with the headlines. If your project was drafted at yesterday's rates and the path forward is less clear today, reach out. We will work through it with you and give you a straight answer.