March 2025 Market Rate Update
Each month, the IAACU Small Business Team aims to provide you with insights into the current trends in Commercial Real Estate market rates, which are influenced by movements in the US Treasury yield.
Recent Interest Rate Movements
In last month’s update, we anticipated that a stock market correction or a global scare might be necessary to drive interest rates downward. However, between February 24th and March 3rd, neither occurred—yet we still saw the 5-year U.S. Treasury rate drop by 0.26%, bringing it below 4%.
This is a significant shift, considering the 5-year Treasury rate has only dipped below 4% for roughly 80 days in the past 12 months.
What Caused the Rate Drop?
Several factors contributed to this decline, including:
- A sharp drop in consumer confidence
- Concerns over impending tariffs on imports
- Market speculation that the Federal Reserve may implement multiple rate cuts this year
These economic indicators suggest a weakening outlook, influencing expectations that rates could continue to fall.
What’s Next for Interest Rates?
Based on current momentum and market activity—without factoring in any major global or political disruptions—rates may continue to decline in the near term. March has already started with the lowest 5-year Treasury rate of the year, and unless a clear bottom is established, we anticipate rates could fall another 20-25 basis points, reaching the 3.75%-3.80% range.
For commercial real estate loans at IAA Credit Union, this could mean rates as low as 6.35%-7.15%, down from the current 6.55%-7.40%.
Lock in Your Target Rate
If you or your clients have a specific target interest rate in mind for a commercial real estate loan, let us know. With a commitment to doing business with us, we’ll actively monitor rates on your behalf and lock in your desired rate the moment it becomes available.
Contact our team today to discuss your financing needs and take advantage of market opportunities.
Read our February Market Rate Update.
*Rates from Resource Center | U.S. Department of the Treasury as of March 3, 2025.
