The final three months of 2019 are turning into a windfall for commercial mortgage backed securities issuers that have found themselves competing for lending opportunities against capped-out government sponsored enterprises and wary insurance companies.

Having the 10-year Treasury below 2% and Fannie Mae and Freddie Mac well past their multifamily lending caps for 2019 put CMBS in a competitive position these past three months as borrowers have searched for low interest rates and liquidity in a competitive environment, a new report from Trepp Analytics said.

“It’s materially better than anything that we’ve seen in recent years. It’s a race to the finish line,” Trepp Senior Managing Director Manus Clancy said about CMBS issuance in an interview with Bisnow.

Clancy said CMBS lending is typically slow after Thanksgiving, but in the first week of December, a couple of single-asset deals were priced and he knows of seven more deals working.

Insurance companies have been more on the sidelines in late 2019 or, at the very least, less competitive against CMBS on the current playing field.

“Once you get into these [interest] rates of 3.5% for 10-year paper, which is where you are getting some of the higher-quality loans written at, … given [insurance companies’] funding needs, they need 10-year paper to match up with their long-term liabilities,” Clancy said. “At 3.5%, they are saying ‘this doesn’t really do much for us, we have to look at other alternative opportunities to get to 4%, 4.5% and 5%.’”

“What it does [do] is it opens up the runway for those CMBS guys for those loans that are high-quality, low-rate lending opportunities,” he added.

Clancy said this high-flight runway — which is expected to subside a bit once the GSEs get their multifamily lending caps back in 2020 —  gives CMBS a chance to play competitively in all commercial asset types, even the large trophy assets in major markets that are the usual targets of insurance companies.

Overall, this final push in 2019 is good for CMBS issuers and borrowers alike, who are not only seeing low interest rates, but more competitive CRE lending, he noted.