Could Rising Rates Spark Another GFC?

Given the duration of the current commercial real estate (CRE) cycle, discussions have recently focused on whether rising interest rates could induce an economic downturn akin to the Global Financial Crisis (GFC).  

As discussed in further detail below in our latest report, Financial Market Conditions: Today vs. Pre-GFC, we don’t envision a global credit crunch like what occurred in 2008 given the vast differences in today’s financial market:

• Commercial Real Estate Construction Activity Less Levered
• Loan-to-Value Ratios are Also More Conservative
• Residential Home Market Much Less Sensitive to Variable Rates
• Higher Replacement Costs Supportive of CRE Valuations