Interest Rates for Private Lending (short-term loans) in 2022 Q3

The interest rate increases which began in June 2022 have had a major effect on short-term private lending for investment real estate. In this guide, we’ll provide an update on private lending interest rates as of August 2022, our prediction for where rates will end up by the end of the year, and how to find out the current rates offered by various private lending companies, which are also known as hard money lenders or bridge lenders.

Private mortgage lending is mainly for short-term financing secured by commercial and residential investment properties with loan terms ranging from 6 months to 2 years, and that’s what we’re focusing on in this guide. We wrote a separate guide to cover interest rates for long-term loans which many private lending firms now offer with terms ranging from 3 to 30 years.

Short-term private lending includes purchase or refinance bridge loans, value-add, fix & flip, rehab to rent, and ground-up construction. From 2017 to mid-2022, the interest rates for these loans have ranged from 7% to 10%, for the majority of lenders. A small percentage of private lenders have charged 11% to 13% over the past few years, but that’s typically for deals that the majority of private lenders won’t consider, including vacant land, high leverage, small loan amounts, rural locations, specialty property types, and others.

How Much Private Lending Rates Have Increased in 2022

By the end of June twenty twenty two, the majority of private lending companies increased their interest rates by 1.5% to 2%. In July, there were additional increases, so the new interest rate range for short-term private lending is 9.5% to 13%. You may still find some lenders lending at 8-9% range in select regions, but they will likely increase their rates soon to keep up with the competition.

Some lenders are going to increase their rates at a much slower pace than others. This varies depending on the lender’s capital structure and their cost of capital. We wrote another guide to explain the disparity in rate increases among private lenders, and we encourage you to read it, but here’s the short version:

The majority of private mortgages that have been funded the past several years have been sold to the secondary market. Lenders that sell their loans have had to increase their rates by a greater amount, and at a faster pace than lenders that don’t sell their loans. The lenders that hold their loans have not had as much pressure to increase rates, but most have increased by half to one percent so far, and they will likely increase more over the next few months.

Interest Rate Prediction for Q4 2022

This guide was published the first week of August 2022, less than 2 weeks after the Federal Reserve increased rates for the 4th time this year. We haven’t yet seen the effects on private lending rates since that recent July rate hike, but perhaps it was already baked in since everyone was expecting it. Everyone in the lending industry is also expecting the Federal Reserve to add one more rate hike in September. Based on what we’ve seen in our industry thus far, here’s our prediction for where rates will end up by the end of 2022.

We believe the new short-term private lending interest rate range will be 9.5% to 14% for the majority of private lenders, with the average rate being 11% for the majority of loans secured by both residential investment properties and commercial real estate. We’ll see what happens after the next Federal Reserve meeting, and we’ll provide another update in the fourth quarter.

How to Find Private Lenders (companies) and Current Interest Rates

The interest rate hikes have been a huge blow to real estate investors, but many are coping with the new reality, and deals are still getting done. If you’re seeking private financing for a real estate deal and if you want to keep up with private lending interest rates, use our website as a resource. All the private lending companies listed have a detailed profile which shows their minimum and maximum interest rate; most lenders have updated the rates on their profile, and we are reaching out to the rest of them to get their new rate range. There are two options for using our platform.

Option 1: Browse Lenders
Search on our site for direct lenders. All lenders have a very detailed profile with information about their lending guidelines, rates, fees and much more. Make contact with each out directly. Send an email, call, or visit their websites. First select a loan type, then enter the state or metro area where the property is located. A few loan types will show lenders that provide short-term bridge loans:

  • Private Money
  • Hard Money
  • Residential Bridge
  • Residential Fix & Flip
  • Residential Rehab & Rent
  • Residential Ground-Up Construction
  • Commercial Bridge
  • Commercial Property Value-Add
  • Commercial Ground-Up Construction

Browse Lenders 


Option 2: Create a Loan Request
Fill out a questionnaire with information about your financing needs. You can then browse lenders and invite a few of them to view your deal. Or ask us for recommendations; we’ll review it and invite a few select lenders that we feel may be a good fit.

Get Started

August 7, 2022