Bank share prices rose again as economic data and market activity bolstered expectations for a Fed rate increase. Initial estimates for Q3 GDP came in above expectations, fueling an increase in bond yields. The 10-year Treasury yield rose 11 basis points to 1.845%, while the broader stock market fell. Regional bank shares rose 1.8% for the week, while the largest banks’ shares rose a smaller 0.9%.
Banks have had a good run recently, with banks’ shares advancing 4.9% and 6.4% over the trailing month, for large and regional banks respectively. Assuming economic growth holds, a Fed rate hike in December and forecasted loan growth could set the banks up for earnings growth in 2017.
Commercial real estate lending growth eased overall, as commercial mortgage lending was flat for the week. Construction and land development lending grew at an 18.6% annualized rate, adding to strong growth in previous weeks. Multifamily mortgage lending grew at a 13.9% annual rate, after a similar figure in the prior week. Commercial mortgages grew at a 0.1% annualized rate. The weekly figures for construction were above trend, while the growth figures for the multifamily and commercial mortgage lending segments were below the year-to-date trend.
Total commercial real estate lending growth for the year-to-date edged lower to 11.1%. The annualized growth rate for construction and land development rose slightly to 14.0%. Multifamily properties’ annualized growth rate for the year-to-date remained at 14.3%. The annualized year-to-date growth rate for commercial mortgages eased to 9.7%. Commercial mortgage growth has been relatively steady this year, while multifamily mortgage and construction and land loan growth rates have been more volatile.
Compliments of Trepp – a member of the EACCNY