--- title: Commercial Loans and Fun Blog | debt yield relaxation description: debt yield relaxation | George Blackburne, owner, offers insight into the commercial loans and mortgage industry in this Commercial Real Estate Loan Tips blog. --- [![c-loans-logo-2025](https://info.c-loans.com/hs-fs/hubfs/images/c-loans-logo-2025.png?width=183&height=86&name=c-loans-logo-2025.png)](https://c-loans.com) [Terms of Use](https://www.c-loans.com/terms-of-use) | [Disclaimer](https://www.c-loans.com/disclaimer) | [Blog](https://info.c-loans.com/) # Commercial Loans and Fun Blog ## [Commercial Loans and the Relaxation of the Debt Yield Ratio](https://info.c-loans.com/commercial-loans-and-the-relaxation-of-the-debt-yield-ratio) Posted by [George Blackburne](https://info.c-loans.com/author/george-blackburne) on Thu, Aug 1, 2019 - [Tweet](https://twitter.com/share) ![German bund](https://info.c-loans.com/hs-fs/hubfs/German%20bund.jpg?width=275&name=German%20bund.jpg)First a correction.  A few days ago, I wrote a blog article about how [deflation is sweeping the world](https://info.c-loans.com/commercial-loans-and-the-deflation-spreading-across-the-world).  In that article, I mentioned that deposit rates in Germany are slightly positive.  I am pretty sure that this statement was wrong. Listening to Bloomberg today, I just discovered that the yield on ten-yield German bunds is a negative 0.46%.  The world is deflating so fast that this yield fell by a full 0.02% in a single day.  That's a pretty big move.  No wonder the Fed is trying to get ahead of deflation in America.   [![Free Commercial Loan Software](https://no-cache.hubspot.com/cta/default/37671/f8924837-4c27-4eb1-a5d8-c49f9b09d9e8.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/f8924837-4c27-4eb1-a5d8-c49f9b09d9e8)   [![Apply For a Commercial Loan to Blackburne & Sons](https://no-cache.hubspot.com/cta/default/37671/34e9010d-6f3b-4979-93c2-9e705da5a9fc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/34e9010d-6f3b-4979-93c2-9e705da5a9fc)   ![Blind date](https://info.c-loans.com/hs-fs/hubfs/Blind%20date.png?width=335&name=Blind%20date.png)   [![Nine-Hour Video Training Course How to Broker Commercial Loans](https://no-cache.hubspot.com/cta/default/37671/2fa994cb-f6ac-4671-821f-b4bd48cb5f1f.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/2fa994cb-f6ac-4671-821f-b4bd48cb5f1f)   I couldn't find the current yield on bank C.D.'s in Germany right now, but they simply *must* be negative because German banks are making hundreds of billions of dollars in commercial loans to large German businesses at a ***negative*** interest rate. Holy crappola!  Is this a wild and crazy world or what?  This negative yield means that if you want the safety of loaning money to the German government, you have to pay the German government almost one-half of one percent ***per year*** for the privilege. **Now on to Today's Training:** The [Debt Yield Ratio](https://www.c-loans.com/knowledge-base/debt-yield-ratio) is different from the [Debt Service Coverage Ratio](https://info.c-loans.com/getting-comfortable-with-the-debt-service-coverage-ratio).     [![Earn 7% to 12% Interest](https://no-cache.hubspot.com/cta/default/37671/79a2ec15-7779-4852-8bfd-adbb3a74a4f2.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/79a2ec15-7779-4852-8bfd-adbb3a74a4f2)   ![Headache](https://info.c-loans.com/hs-fs/hubfs/Headache.png?width=371&name=Headache.png)   [![New call-to-action](https://no-cache.hubspot.com/cta/default/37671/0e554b32-5c44-4d5f-bdd1-07e96a1be7f9.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/0e554b32-5c44-4d5f-bdd1-07e96a1be7f9)   [![Please Click After Viewing Earn Up to 12% Interest Video](https://no-cache.hubspot.com/cta/default/37671/0bbf9ae8-e889-4421-8c33-3ef892bf2a00.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/0bbf9ae8-e889-4421-8c33-3ef892bf2a00)   The [Debt Service Coverage Ratio](https://info.c-loans.com/getting-comfortable-with-the-debt-service-coverage-ratio) is a financial ratio, used when making commercial real estate loans, designed to determine if the property generates ***more than enough net income*** (typically 1.25x) to make the loan payments on the proposed loan. The [Debt Yield Ratio](https://www.c-loans.com/knowledge-base/debt-yield-ratio), in contrast, is a financial ratio, used when making commercial loans, designed to make sure that the amount of the new commercial loan never gets too large in relation to the net income thrown off by the property - **no matter how low interest rates get**.  This latter point is critical.   In the lead-up to the financial crisis in 2008, conduits brought amazingly low interest rates on commercial loans to prime commercial real estate.  Because interest rates were so low (in comparison to prior years) in 2005, 2006, and 2007 that investors were able to achieve historically sky-high loan-to-value ratios, sometimes as high as 80% loan-to-value!   [![Submit Your Loan to 750 Commercial Lenders Using C-Loans.com.  It's Free!](https://no-cache.hubspot.com/cta/default/37671/9f0b2bed-fb9b-455d-b8be-17d8f7960a2a.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/9f0b2bed-fb9b-455d-b8be-17d8f7960a2a)   ![Hereditary](https://info.c-loans.com/hs-fs/hubfs/Hereditary.png?width=244&name=Hereditary.png)   [![Fee Agreement and Fee Collection Course. Just $199.](https://no-cache.hubspot.com/cta/default/37671/b8c2bde4-6428-433c-85cd-dfd884ff4a2c.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/b8c2bde4-6428-433c-85cd-dfd884ff4a2c)   Because the buyers of commercial real estate could now buy trophy properties with 80% leverage, thousands of wealthy investors poured into the trophy commercial real estate market.  Up-up-up went prices.  Down-down-down went cap rates.  The property valuations and the size of the loans against them went crazy. ***Bam!***  Then the Great Recession struck. Down-down-down went the values of trophy commercial real estate.  Borrowers defaulted on their huge CMBS loans.  The bonds backed by ***commercial mortgage-backed securities*** (IOU's backed by huge pools of commercial real estate loans) took horrendous losses.   [![Free List of 3,159 Commercial Lenders Sort By Your Own Criteria](https://no-cache.hubspot.com/cta/default/37671/edc33fe8-9d87-477b-bf2f-07a33d3d2d24.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/edc33fe8-9d87-477b-bf2f-07a33d3d2d24)   ![The Pill](https://info.c-loans.com/hs-fs/hubfs/The%20Pill.png?width=319&name=The%20Pill.png)   [![Commercial Mortgage Brokers You're Doing It All Wrong](https://no-cache.hubspot.com/cta/default/37671/47353a06-ecdf-49ad-a26d-0bd2888fb186.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/47353a06-ecdf-49ad-a26d-0bd2888fb186)   After taking horrendous losses, the buyers of commercial mortgage-backed securities lost their appetite for these bonds. In 2009, the CMBS industry contracted almost out of existence.  Dozens of ***conduit lenders*** (specialized mortgage companies originating commercial loans destined for securitization) closed their doors.  It was a bloodbath.  An entire industry - the conduit industry - was almost wiped off the face of the earth. Finally - slowly - the appetite of CMBS buyers returned, but they were determined to never again invest in bonds backed by commercial loans that were far too large in comparison to the amount of net income being generated by underlying the property. The result was the creation of the Debt Yield Ratio.  At first, a conduit could not originate a CMBS loan with a debt yield of less than 10%.  This kept most conduit loans at less than 60% loan-to-value.   [![Video Course - How To Market For Commercial Loans](https://no-cache.hubspot.com/cta/default/37671/c1051bad-ef5d-4c65-b573-e4432b1769ef.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/c1051bad-ef5d-4c65-b573-e4432b1769ef)    ![Treadmill-1](https://info.c-loans.com/hs-fs/hubfs/Treadmill-1.png?width=284&name=Treadmill-1.png)   [![Need a NMLS License Or Your Renewal Hours?](https://no-cache.hubspot.com/cta/default/37671/9f6491a8-af19-4ba1-9236-8e97c3cd1d16.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/9f6491a8-af19-4ba1-9236-8e97c3cd1d16)   Why would any borrower be content with a $7 million loan against his office building if the loan-to-value ratio was only 58%?  The answer was that the conduits were the only lenders making [non-recourse commercial loans](https://info.c-loans.com/topic/non-recourse-loan).   Okay, life companies were also making non-recourse commercial loans, but their properties had to be breathtakingly beautiful.  Conduits, on the other hand, would make large, non-recourse, commercial loans on average-looking commercial properties. The new wave of CMBS loans performed spectacularly in 2011, 2012, and thereafter, so the appetite of CMBS investors became ravenous.  More and more exceptions to the 10% minimum Debt Yield Ratio were made until 9% became the norm.   [![Dirt Cheap Commercial Leads Choose Type, Size, States, Location](https://no-cache.hubspot.com/cta/default/37671/5cb4ca00-2cc5-4cbd-a3f7-6e2d89bc5bf9.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/5cb4ca00-2cc5-4cbd-a3f7-6e2d89bc5bf9)   ![Skip to Friday](https://info.c-loans.com/hs-fs/hubfs/Skip%20to%20Friday.jpg?width=348&name=Skip%20to%20Friday.jpg)   [![Free Commercial Loan Leads](https://no-cache.hubspot.com/cta/default/37671/fef6f4c9-599a-4fcb-96e3-61bcc701f537.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/fef6f4c9-599a-4fcb-96e3-61bcc701f537)   I am sure that conduit Debt Yield Ratios have fallen below 9%.  Does anyone out there work for a conduit?  What are conduit Debt Yields today? This article was triggered by the rate sheet of a [money center bank](https://info.c-loans.com/commercial-loans-and-money-center-banks).  Now this bank is a portfolio lender, rather than a conduit lender, but they recently publicized a minimum Debt Yield Ratio of 5% for apartments, 6% for commercial, and 8% for multifamily.  Wow.  The market is truly ravenous for commercial loans. **Receive a Billion Dollar Yacht  - Just For Entering a Commercial Loan into the C-Loans System and Submitting It to Six Lenders.** Really... I am full of beans.  *Haha!  *But you do get a wonderful assortment of goodies, just for submitting your commercial loan to six of our lenders.   [![Money Tight?  200-Page Income Property Underwriting Manual - $199](https://no-cache.hubspot.com/cta/default/37671/11407b27-cb27-4ae8-91af-ca91dd4067cc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/11407b27-cb27-4ae8-91af-ca91dd4067cc)   ![Catnip](https://info.c-loans.com/hs-fs/hubfs/Catnip.png?width=341&name=Catnip.png)   [![Become a Hard Money Lender. 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Next, after submitting your commercial loan to six of our banks, **you can create a gorgeous PDF of your loan package that you can use to submit your deal to dozens of your own banks.**  Look for a button at the very end of the six-step process that says, "Create a PDF." Lastly, you get to see the 150 new banks that we have added to [C-Loans.com](http://www.c-loans.com) in the past three weeks.  Oh, my goodness.  Hungry banks are joining C-Loans in droves.   [![Are You a Developer?  Is Your Construction Lender Requiring More Equity?](https://no-cache.hubspot.com/cta/default/37671/0af0620a-006a-4de1-9b37-cb9e915d3122.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/0af0620a-006a-4de1-9b37-cb9e915d3122)   ![Safety standards](https://info.c-loans.com/hs-fs/hubfs/Safety%20standards.png?width=384&name=Safety%20standards.png)   [![Earn 25.4% Annual Yield - Attorney Sponsor in Business For 39 years](https://no-cache.hubspot.com/cta/default/37671/83629e8e-4f46-48e8-9054-cdef870f79a3.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/83629e8e-4f46-48e8-9054-cdef870f79a3)   Remember, ***Commercial Mortgage Mania*** is now in full swing.  This will be the greatest turkey shoot of your life.  You should make more money as a commercial mortgage broker in the next six months than you have ever made in your life; so get out there, find some commercial property owner, offer him a 4.75% new first mortgage on his office building, and put some cash in his pockets. Seriously, if you meet anyone who owns a commercial property, tell them, **"I can lower your interest rate to 4.75% fixed, lower your monthly payments, and put tons of cash in your pocket."**     [![Convince a Bank to Join C-Loans Earn Three HUGE Fees!](https://no-cache.hubspot.com/cta/default/37671/e122102d-9a59-45e5-9ecd-7183ad793c26.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/e122102d-9a59-45e5-9ecd-7183ad793c26)   ![Confessional](https://info.c-loans.com/hs-fs/hubfs/Confessional.png?width=314&name=Confessional.png)   [![Get Four Free Commercial  Training Courses](https://no-cache.hubspot.com/cta/default/37671/ac9109b7-8c62-4adb-899d-c1ee8387cf5e.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/ac9109b7-8c62-4adb-899d-c1ee8387cf5e)   [![Subscribe to the Commercial Loans and Fun Blog](https://no-cache.hubspot.com/cta/default/37671/a3bd32c3-bff3-4066-9ca8-2ec475fb5bbc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/a3bd32c3-bff3-4066-9ca8-2ec475fb5bbc) 1 Comment [Click here to read/write comments](https://info.c-loans.com/commercial-loans-and-the-relaxation-of-the-debt-yield-ratio#comments-listing) Topics: [debt yield relaxation](https://info.c-loans.com/topic/debt-yield-relaxation) [All posts](https://info.c-loans.com/all) ### George Blackburne III Owner of C-Loans, Inc. ![George Blackburne III C-Loans Owner](https://info.c-loans.com/hs-fs/hubfs/George%20Head%20Shot%20Small%205%20by%207%20copy.jpg?width=158&name=George%20Head%20Shot%20Small%205%20by%207%20copy.jpg) ### Subscribe via E-mail ### Connect with C-Loans ## [![Get the Latest Scoop on C-Loans Inc.](https://no-cache.hubspot.com/cta/default/37671/bacfb58b-143e-40d7-b126-33c182b5b90b.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/bacfb58b-143e-40d7-b126-33c182b5b90b) C-Loans.com® is sponsored by  C-Loans, Inc. — For more information, contact Tom Blackburne 555 University Ave., Suite 150, Sacramento, CA 95825 Telephone: (916) 338-3232 x 317 * Tom Blackburne in Indiana: (574) 210-6686 * Fax: (916) 338-2328 Real Estate Broker -- California Department of Real Estate -- License Number 01330173 Arizona Dept. of Financial Institutions – License Number 0909472 The Florida Mortgage Brokers License Number: 0708758 [Read our many client Success Stories](https://c-loans.com/mortgage-brokers-overview/success-stories/) » © 2025 C-Loans, Inc. 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