Commercial Loan Pricing Market Update (January 2022)

Since March 2020, we’ve posted regular updates on the commercial loan pricing markets, based on what we’ve seen when examining the PrecisionLender dataset. We look at several popular metrics and point out areas in which there have been noteworthy changes. 

In today’s analysis, for the month of January 2022, we looked at the increase in SOFR activity, SOFR spreads vs. LIBOR spreads, and the impact of steepening yield curves. 

If you’d like to see our previous loan pricing market updates, you can find them here.  

If you have questions about metrics that have appeared in previous posts, but not this latest one, please reach out to us at

NOTE: PrecisionLender’s data reflects actual commercial opportunities priced (loans, deposits, and other fee-based business) by more than 150 banks in the United States, ranging in size from small community banks to top 10 U.S. institutions. In addition to their variance in size, these banks are also geographically diverse, with borrowers in all 50 states.

Pricing Volume Starts the Year Strong 

Since we’re starting a new year, we moved up the month we’re indexing current volume against – from January 2021 to July. Last month’s pricing volume indicates that bankers rushed back to their desks in January after the December holidays. On a net basis, the volume average is 101 for the past 7 months (July 2021 is indexed to 100), but January 2022 volume was 116. This rise from 4Q21 (average 97) to January is similar to the behavior we saw at the beginning of 2021 when we observed a lift from 4Q20 activity (December 2020 volume was 90 vs. July 2020) into the new year (January 2021 was 105.)  

Priced Commercial Loan Volume by Month
(Indexed to July 2021 = 100)


Floating Rate Volume Mix: SOFR Replaces LIBOR; Swap Volume Increases 

Using October 2021 as the “launch date” for SOFR activity, we indexed amount priced by Rate Type back to October = 100 for each rate type breakout. The most striking – but not surprising – change is the growth in SOFR and the corresponding drop in 1-Month LIBOR.
We also saw a sharp increase in Swap pricing activity. Recently, we have had many conversations with clients about leveraging Swap pricing and SOFR swaps in particular. 

Floating Rate Type Volume
Indexed to October 2021

Overall Rate Type Mix: A Steady Picture

It’s also worth noting that, while there have been significant shifts in the mix of floating rate types, the overall rate mix picture has been more static. Fixed rate loan pricing remains at 40% of balances priced – the same percentage we observed in October 2021 and even June 2021. Adjustable structures are up slightly since October, from 9 to 10% of the mix. And while swap   activity has increased significantly, that’s a relative thing: overall these make up 5% of the overall mix – up from 3% in October.  

Rate Type Mix

January 2022 Snapshot

From SOFR to LIBOR: No Lift in Spreads

When SOFR pricing launched in earnest in Q4 2021, many bankers declared that equivalent spreads to Libor would not be the “acceptable/goal/target.” SOFR spreads were expected to carry a lift to historical Libor spreads. But the pricing results indicate that this goal may not have been achieved—yet.  

SOFR spreads dropped below 250 bps in December and January activity and have fallen 10 bps since our last update in November – from 2.54% to 2.44%. By comparison, LIBOR spreads averaged 2.56% from August through December. 

Meanwhile, spreads to SOFR on swaps had an average spread of just 1.87% in January – something we’ll continue to monitor. 

A separate note: Spreads to prime bounced up 17 bps, to 0.33% in January. We’ll continue to observe this to see if it becomes a trend that demands explanation. 

Weighted Average SOFR Spreads

More Large SOFR Loans Priced … With Lower Spreads

Digging another layer down on SOFR loans priced, we found that the mix of SOFR loans priced in January shifted more toward the largest deals: 81% of the  January SOFR mix were loans >$10M, vs. 74% in November 2021. Meanwhile, the spreads on those larger deals have dropped since November – by 13 bps on $10-25M loans and 6 bps on >$25M loans. 

Mix by Loan Amount, SOFR Loans Priced

Spread to Index, SOFR Loans Priced

Big Increases in Funding Costs 

With the mothballing of LIBOR  , we’re moving away from using the 3-month LIBOR Swap curve as a proxy for funding costs and will instead use the FHLB Composite curve. 

In the past 60 days, funding costs have increased ~50 bps in the 12- to 60-month maturity segments, while the 84- to 120-month segment increased ~30 bps. 

FHLB Composite Curve, Selected Dates


We’re also going to start tracking the Term SOFR curve. Because it’s in its infancy, there isn’t enough volume yet to set the curve beyond 12 months.

Looking at that 12-month maturity point over the past 60 days (from Dec. 2, 2021 – Feb. 4, 2022), we can see that the Term SOFR, 3-Month LIBOR Swap, and FHLB Composite curves have essentially moved in lockstep, albeit at different levels. They’ve all moved up roughly 50 bps during that time span. The Term SOFR curve is ~30 bps lower than the FHLB Composite, due in part to the absence of a credit component and a liquidity component embedded in the SOFR curve. 

One-month SOFR has not moved from 5 bps, mimicking the static levels for floating-rate funding costs we’ve seen in the 3-Month LIBOR Swap and FHLB curves.

Funding Curves Comparison
 Past 60 Days


Fixed-Rates Coupons Rise … 

After hovering around the 3.50% mark for months, fixed-rate coupons  broke out in January, moving up 17 basis points to 3.71%. Meanwhile, SOFR floating rate coupons seem to have settled at the 2.50% level after starting off ~25 bps higher earlier in the fall. 

Coupon Rates by Month, Rolling Trend

… But Not Enough to Offset COF Increases

Unfortunately the fixed-rate coupon increase fell  short of compensating for the aforementioned  rise in COF in the past 60 days. As a result, fixed-rate NIM continued its fall in January, dropping  to 2.0%, ~40 basis points lower than the levels we saw in the summer of 2021. 

NIM by Month, Rolling Trend

Got Questions?   

Our banking consultants and data scientists are combing through PrecisionLender pricing data every day. If there is anything you’d like to know about what they’re seeing, please send along your questions to  






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