Bank shares rose for a third week, although rates were slower than in previous weeks. Regional bank shares rose by 1.5%, while the largest banks gained a collective 1.9% for the week. Among the largest banks, Bank of America stood out with a 4.3% weekly gain.
Higher interest rates are helping to propel bank shares as the 10-year Treasury yield picked up 4 basis points to end the week at 2.372%. The Fed is anticipated to raise rates at its next meeting in the second week of December, the last FOMC meeting of the year. Inflation is expected to increase, which will give the Fed more room to maneuver heading into 2017.
If lending growth picks up, banks could reap the benefits of both higher interest margins and higher loan volume.
Overall commercial real estate lending growth was modest. Growth in commercial mortgages was flat, while multifamily mortgage and construction lending remained positive. Construction and land development lending grew at a 6.7% annualized rate, down from the strong growth of the previous week. Multifamily mortgage lending grew by an annual rate of 13.4%, building on the gains in the prior week. Commercial mortgages inched ahead at a 1.5% annual rate, after a similarly flat week before. The weekly figures for all three major CRE lending segments were below the year-to-date trend.
Total commercial real estate lending growth for the year-to-date was 11.0%. The annualized growth rate for construction and land development edged lower to 14.1%. Multifamily properties’ annualized growth rate for the year-to-date was even at 14.0%. The annualized year-to-date growth rate for commercial mortgages fell slightly to 9.6%. 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