Why AI Debt Is Driving Your Commercial Loan Rate, and Why Locking In Now Makes Sense
Terrydale Capital
Sep 10, 2026 10 Min read
If your last few quotes came back higher than you expected, you are not imagining it, and the Fed is not the reason.
Since September 2024, the Fed has cut short-term rates by 1.75 percentage points. Over that same stretch, the 10-year Treasury, which prices most fixed-rate commercial loans, is up roughly a full point. The 30-year is up even more. Owners who held off on refinancing because they expected the cuts to trickle down to their loan quote have watched that quote go the other direction instead.
The reason is not complicated once you see it, but almost nobody is explaining it to borrowers directly. Long-term rates are not set by the Fed. They are set by supply and demand for long-term money, and right now the largest new borrower in that market is not a homebuilder or a government. It is the AI industry.
The biggest borrower nobody underwrites against
Debt tied to AI infrastructure has reached roughly $1.2 trillion, making it the single largest sector in the U.S. investment-grade bond market, larger than banks. A meaningful share of that borrowing does not sit on the tech company's own balance sheet. It runs through special purpose vehicles built specifically to keep the debt off the parent company's books, backed instead by the data center lease itself.
Picture a lumber yard with a fixed supply on a Tuesday morning. If a contractor building a stadium walks in and buys half the inventory, the price per board goes up for the homeowner building a shed, even though the homeowner has nothing to do with the stadium. That is roughly what is happening in the bond market that prices your loan. When five hyperscalers issue $121 billion in a single year against a five-year average of $28 billion, every other borrower competing for that same pool of long-term capital, including a Texas multifamily owner refinancing a $12 million asset, pays more for it.
This is a supply story, not an inflation story. Most of the increase in long-term Treasury yields since the Fed began cutting has come from a higher term premium, which is the extra return lenders demand to tie up money for ten or thirty years, rather than from a jump in inflation expectations. That distinction matters, because it means the usual playbook of waiting for inflation to cool does not necessarily bring your rate down. The competition for long-term capital is the thing pushing it up, and that competition is not going away because one CPI print comes in soft.
Why this shows up unevenly
Corporate America, broadly, is not feeling this. Net interest payments across large public companies have fallen to roughly 0.4% of GDP, because most large firms locked in fixed-rate debt during the low-rate years and have little left to refinance soon. The tightening from a higher-for-longer environment does not land on them. It lands on whoever did not term out, which includes floating-rate borrowers, anyone with a loan maturing in the next 12 to 24 months, and commercial real estate owners generally.
That is the part worth sitting with. The economy can look fine in the aggregate while your specific book of loans feels the full weight of it, because the borrowers who are exposed and the borrowers who set the headline numbers are not the same group.
The case for locking in now
Look at where the curve actually sits. Short-term money is priced around 4.4%. Ten-year money is around 4.8%. Thirty-year is around 5.25%. That is a narrow spread across three decades of maturity, which means you are not paying much of a premium today to lock in long-term certainty instead of staying on a floating index. If the Fed's next move is a hike rather than a cut, which the market is currently pricing as a real possibility, floating-rate borrowers feel it immediately. Fixed-rate borrowers do not feel it at all.
There is a second piece that gets less attention. With inflation still running above the Fed's target, a fixed-rate loan quietly works in the borrower's favor over time. The payment stays flat while rents typically do not. Every year that passes, the loan gets easier to carry in real terms. Fixed-rate debt on an income-producing property is one of the few places where inflation helps the borrower rather than eroding their position.
The third factor is availability, not price. Much of the money behind CRE lending today does not come directly from banks. It flows through private credit funds, which in turn borrow against their own lending books from the same banks. If that funding chain tightens, which is a real possibility if AI-related credit begins to reprice, advance rates and appetite can pull back faster than headline rates move. Owners who wait are not just risking a worse rate. They are risking a narrower set of lenders willing to quote the deal at all. Deals more often die on availability than on price.
We will be straight about the tradeoff, because insurance is never free. Locking in a fixed rate means giving up the upside if rates do fall meaningfully, and unwinding a fixed-rate commercial loan early typically means prepayment penalties, yield maintenance, or defeasance, all of which cost real money. Anyone telling a borrower that locking in has no downside is not being straight with them. But the risk profile right now is genuinely two-sided in a way it has not been for a while. When the risk runs both directions, certainty is worth paying for.
What this means for owners with a maturity coming due
If you are carrying a floating-rate loan or facing a maturity inside the next 18 months, this is not a decision to defer until the picture clarifies. The picture may not clarify in your favor. We shop every deal across our full lender network, comparing agency, bank, life company, CMBS, and private capital execution side by side, so owners are not guessing at where the best fixed-rate terms actually sit in this environment. If you want to see where your numbers land before your next maturity forces the decision, our team can walk through the options with you.
Partner With Terrydale Capital for Your Debt Financing Needs
When it comes to debt financing, understanding the right timing, process, and options is crucial. At Terrydale Capital, we provide a comprehensive range of commercial loan solutions tailored to meet your business's unique needs.
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Headquartered in Dallas, Texas, Terrydale Capital is a leader in commercial real estate financing. We have close relationships with the nation’s top banks, lenders & family offices allowing us to provide the most competitive financing solutions in the market.
