The first half of 2026 settled an argument the market had been having with itself for three years: rates are not going back to where they were, and the participants who structured for that reality are being separated from the participants who hoped otherwise. Here's how we see the board at mid-year, and how we're positioned for the second half.
Rates and the Fed. The federal funds target sits at 3.50–4.00% territory's lower band, and the louder story is at the long end: the 10-year Treasury averaged roughly 4.4% as June closed — up meaningfully from a year ago — with persistent federal deficits keeping steady upward pressure on long rates regardless of what the Fed does at the short end. Our working assumption for the second half is unchanged from January: underwrite at today's cost of capital, treat any rate relief as upside rather than a plan, and be suspicious of any deal that only works if the 10-year cooperates.
The maturity wall becomes a transaction pipeline. Per the Mortgage Bankers Association's February survey, $875 billion of commercial mortgages matures in 2026 — 17% of the $5 trillion outstanding — with another $652 billion scheduled for 2027. The meaningful shift in the first half wasn't the size of the wall; it was behavior. Lenders have moved from extending to resolving, and MBA's own forecast has total originations rising 27% this year to $805 billion. Translation: assets and loans are finally trading. Every resolution is a priced event, and priced events are where disciplined buyers and lenders find their entry points. We expect the second half to offer more of them, not fewer.
Credit stays our loudest opportunity. With depositories facing 21% of their commercial mortgage balances maturing this year and credit companies closer to 29%, traditional lenders are managing their own books, not growing them. Builders and operators with sound projects still need construction, bridge, and transitional capital — and the private lenders providing it are doing so at conservative advance rates, in first-lien position, at yields that would have required equity risk five years ago. We remain deliberate about that trade: senior secured, real collateral, short duration, no exceptions on lien position.
Housing: the shortage is the strategy. The demand backdrop for residential development hasn't softened. The White House Council of Economic Advisers put the single-family shortfall at more than 10 million homes this spring; Realtor.com's more conservative methodology still counts a 4-million-home cumulative gap, with 1.41 million households formed last year against 1.36 million starts. Estimates differ; the direction doesn't. Meanwhile, elevated rates have cleared undisciplined competition out of the development pipeline — the projects that only penciled at 2021 money aren't getting built. For ground-up single-family development in growth markets, executed with experienced partners at today's honest land basis, the second half of 2026 is a better environment than any point in the last three years.
Public markets, briefly. Equities entered the second half resilient and richly priced, with the risk-free rate not far below 4.5%. We don't forecast indexes. We simply note that when Treasuries pay what they pay, the compensation for equity risk is thin by historical standards — and that income from real assets, structured senior in the capital stack, is worth more in a portfolio precisely when the alternative premium is this narrow.
Positioning into the second half. Nothing about our posture changes: first-lien credit where banks have retreated; development into a measured, decade-deep housing shortage; stabilized income assets with fixed, long-dated debt; and a willingness to pass on everything that requires optimism to pencil. The market spent three years waiting for the old world to come back. It stopped waiting this year. So did the opportunity set.
Sources: Mortgage Bankers Association, 2025 Survey of Loan Maturity Volumes and CREF Forecast (February 2026); White House Council of Economic Advisers annual report (April 2026), as reported by Bloomberg; Realtor.com 2026 Housing Supply Gap Report (March 2026); Federal Reserve H.15 data. Figures as of mid-2026 and subject to change. This commentary reflects SIMM Capital's opinions, is provided for informational purposes only, is not investment advice, and is not an offer or solicitation of any security. Any offering is made only to verified accredited investors under Rule 506(c) through definitive offering documents.