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Your Balloon Payment Won't Wait for Lower Rates

Writer: Jenny Willardson, CCIM
Jenny Willardson, CCIM
15 hours ago
3 min read

By Jenny Willardson, CCIM — Principal Broker, Elevate Commercial


Facing a commercial loan balloon payment? Explore your options before your loan matures.
Facing a commercial loan balloon payment? Explore your options before your loan matures.

If your commercial loan has a balloon payment due in the next year or two, you may be waiting for rates to drop before you decide what to do. Here is why that plan is riskier than it looks, and why listing your property now may be the smarter move.


Rates Went Up, Not Down


The Federal Reserve raised interest rates in September 2026. Most commercial loans are priced off Treasury rates, and those went up too.

Treasury rate

Oct 22, 2025

Oct 22, 2026

Change

5-year

3.56%

4.78%

+1.22 points

10-year

3.97%

4.96%

+0.99 points

Rates dipped this week, but they are still about a full point higher than a year ago. An owner who decided to wait a year ago is now looking at a higher rate, not a lower one.


Inflation is running at 3.7%, so a rate cut is not likely soon.


The Fed meets again October 27 and 28. As of mid-October, futures markets expected it to hold rates steady, with about a two-in-three chance of another increase in December.


Banks Are Running Out of Patience


  • About $875 billion in commercial loans come due nationwide in 2026, with another $652 billion in 2027.

  • Lenders are giving out fewer extensions than they did in past years.

  • Late payments on commercial mortgage bonds hit 8.02% in September, the highest level since late 2020.


That leaves less room to ask your lender for more time.


The Refinance Math Has Changed


Here is a simple example. It is hypothetical, and the new rate is an assumption, not a lender quote.

Say you have a $1.6 million loan from 2021 at 4.25%, and your building earns $165,000 a year after expenses. If you refinance at 7.25%:


  • Your loan payments go up about $17,400 a year.

  • Your cash flow drops from about $61,000 to about $43,600.

  • If a tenant leaves and income falls to $140,000, the bank will lend you less. You would need to bring about $108,500 to closing just to pay off the old loan.


Selling Takes Longer Than You Think


Over the past 12 months, commercial properties in our local MLS that sold were on the market for about:


  • 199 days in Anchorage, with 156 commercial listings for sale in September

  • 102 days in the Mat-Su, with 69 listings for sale in September


That is before closing, which takes more time. The number of listings is also rising, which means more competition for buyers. If your balloon is due in a year, your window to sell is already tight.


Why Listing Now Makes Sense


  • You stay in control. You set the timeline instead of your lender.

  • You skip the cash-in refinance. The sale pays off the balloon.

  • You beat the crowd. You get to market before more owners are forced to sell.

  • You are not locked in. Listing shows you what your property is worth today. If rates do drop, you can still refinance.


Let's Run Your Numbers


If your loan comes due in the next 24 months, I can show you side by side what it costs to refinance, what it costs to wait, and what your property could sell for today. Call or email me for a confidential review of your Anchorage or Mat-Su property.


Jenny Willardson, CCIM Principal Broker, Elevate Commercial


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