Trepp’s LifeComps Index, measuring total returns on commercial mortgages originated by life insurance companies, rebounded in the first quarter of 2025 from a loss at the end of 2024. LifeComps participants reported a total return of 2.73% in Q1, comprised of 1.19% of income return and 1.53% of appreciation return. The reversal from the prior quarter’s negative appreciation number highlights the volatility of the market in recent quarters, according to Trepp.
While late 2024 saw the federal funds rate cut by 100 basis points over the last third of the year, expectations for continuing rate cuts in 2025 remain mixed. Much of Q1’s improvement can be explained by a drop in Treasury yields over the quarter, particularly at shorter durations along the curve.Â
“These high yields are linked to the current uncertainty in the economic environment,” Trepp reported. “Inflation appears to be receding, with the personal consumption expenditures price index decreasing across the quarter from 2.60% in December to 2.30% in March. Concerns around potential tariff impacts from the new administration will show up in the upcoming Q2 data, as the original announcements were in early April.”
The consortium’s mortgage origination volume was down from previous quarters. New originations in Q1 comprised $4.34 billion, compared to $6.66 billion in Q4 2024 and $5.59 billion in Q3 2024. The value-weighted average coupon rate for the consortium was 4.52%, up from 4.46% in Q4 2024. “Conservative life insurance lenders appear to be approaching the current market cautiously and requiring greater risk
premium,” according to Trepp.
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