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If you’ve been waiting for rates to come down to refinance or lock rate, our advice is: don’t wait. Here’s what’s driving inflation and thus interest rates:
- Saudi Arabia shut down its East-West oil pipeline after an Iran-backed Houthi drone strike last weekend. This 745-mile pipeline to the Red Sea helped Saudi Arabia, the world’s largest oil exporter, bypass the blocked Strait of Hormuz, through which 20% of the world’s oil used to pass.
- The Houthis also now have full control of Yemen’s coast and the port city of Mokha, vital to shipping through the Red Sea, through which 5-7% of global seaborne oil and 20% of global trade pass annually. With three of the four delivery routes from the Middle East closed or under threat, tankers and freighters are having to reroute around the Cape of Good Hope at the tip of Africa. That adds thousands of miles per voyage, driving delivery costs up sharply and pushing inflation higher.
- On this news, global crude prices closed above $106 Monday.
- To make matters worse, our US emergency oil reserves dropped below the “safe floor” of 250 million barrels this week, the equivalent of a 90-day supply of oil imports. That leaves the White House with no room to fight rises in gas prices. Below 250 million barrels, the underground salt caverns in southeast Texas risk permanent damage and there is no fast way to buy 200 million barrels.
- The leaders of the 11-nation BRICS bloc met in New Delhi last weekend, representing roughly 40% of the world’s population, with Iran’s president pushing to expand trade in national currencies to blunt US sanctions and cut the world’s reliance on the US dollar.
- The BRICS bloc continues cutting investments in US Treasuries. Meanwhile, Treasury Secretary Bessent is tapping into emergency funds to buy US Treasuries in an attempt to hold bond yields down. President Trump is threatening BRICS by making trade with BRICS countries more expensive through higher tariffs, port fees and restrictions on vessels tied to BRICS trade.
The bottom line is we appear to be in for a long haul getting oil flowing through the Strait of Hormuz and the Red Sea, which has pushed oil prices higher. Higher oil is fueling inflation, which forced the Fed’s hand. On that note, the Fed just voted unanimously to raise the Fed Funds Rate by 25 basis points to 4.00% and indicated most officials project one more increase in December. The 10-year is presently at 5.01%. Under these circumstances we do not expect it to retreat any time soon.
Where GSP Is Active
GSP/AXCS has grown to over 100 employees with 7 offices nationwide. Across all offices, we have been active with over 1,000 capital sources in the last 90 days across senior debt, construction, bridge, equity, mezzanine, preferred equity, JV Equity, and Rescue Capital. We have worked on everything from lot development to multifamily refinance.
Western States CREF Conference Recap
Spencer just returned from the Western States CREF Conference (commercial real estate finance) in Las Vegas. GSP hosted two rooms with over 40 meetings with capital providers from Life Cos to Debt Funds. Spencer’s updates from the “Life Co room” are below:
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Life Cos continue to see spreads come down. Best pricing typically is in the 115 bps +/- range over Treasuries, with most deals pricing in the 150-180 bps range for typical Life Co loans. There was conversation that spreads are as low as they can go without corporate bonds compressing further. Small balance deals below $10M run in the 185-210 bps range. Groups are lending on office for a premium.
- Floating rate debt is also available for sponsors who don't want to lock in a fixed rate, at similar spreads. Rate reset programs can be another tool for sponsors not wanting to lock in rates for too long and over 3+3+3 or 5+5 year terms for example.
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Life Cos are also offering bridge loans on both a fixed and floating basis. Typical pricing is in the low 200s to low 300s spread over either SOFR or Treasuries. These can be utilized for lease-up plays or value-add.
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Additionally, construction lending from Life Cos is available from as low as $3M to $200M+ with typical sizing of 60% LTC and 200s over Treasuries. However, for larger loans sizing can go as high as 80% LTC at SOFR + 400 or 85% for participating mortgages.
- All lenders still had capital to deploy, with plenty of dry powder for the rest of the year. Some groups have limited 5-year capital, but there is ample 7- and 10-year capital.
GSP acquired The Alison Company in April of 2026 and, with the addition of that platform, is now servicing and originating correspondent life insurance company loans. This conference was the first time getting both teams in front of lenders, and with 20 Life Co meetings it was a highly successful event.
Recent GSP Closed Financings:
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