July 15, 2026
The Federal Reserve made an announcement recently that sounds technical, but it has a real effect on how much it costs to borrow money for commercial real estate deals.
The Fed decided to keep buying about 10 billion dollars a month in Treasury bills through August 13. This is the third month in a row at that level. It is a big drop from December 2025, when the Fed was buying 40 billion dollars a month, according to reporting from Bloomberg covered by CRE Daily.
At the same time, the Fed also has about 17.6 billion dollars in separate purchases planned for the same period. Total bank reserves in the system are now at 3.14 trillion dollars, up from 2.85 trillion at the end of last year.
The U.S. Treasury is planning to sell a lot more short term bills over the next few months. It wants to build up its cash balance to over one trillion dollars. When the Treasury sells more bills, money moves out of the banking system and into the Treasury's account. That means banks have less cash on hand.
When banks have less cash, borrowing between banks gets more expensive. And when that happens, it usually pushes up the rates banks charge on loans, including construction loans, bridge loans, and commercial mortgages, according to CRE Daily.
One thing worth watching is a rate called SOFR, which is what banks pay to borrow money overnight against Treasuries. Right now SOFR is running below the rate the Fed pays banks to hold reserves, and it recently hit a six week low. That suggests there is actually plenty of cash sitting around right now, even with all this going on.
If you are working on a commercial acquisition, a refinance, or a construction loan right now, the honest answer is that things look stable for the moment, but the situation could shift over the next month or two as the Treasury ramps up its bill sales. Investors have already been more cautious about deploying capital this year, and tighter bank funding could add to that caution if reserves drop faster than expected, according to CRE Daily.
A few practical takeaways. If your deal depends on a floating rate loan, keep an eye on SOFR over the next few weeks. If you have flexibility on timing, locking in financing sooner rather than later could make sense if you expect rates to move. And check back after August 13, since that is when the Fed says it will reassess this whole plan.
Disclaimer: This content is intended for informational and educational purposes only and is not intended to be construed as legal, tax, financial, or insurance advice. Every property and tax situation is unique. Please consult a licensed attorney, CPA, or tax professional regarding your specific circumstances before making any decisions related to property improvements, tax assessments, or real estate transactions. Mohammed M. Rahman is a licensed real estate broker in New York. Contact: Mo@ClosedByMo.com.
