Rate Hike or Rate Hype?April 2, 2019
Will we see an interest rate cut in the near future? The White House is calling on the Federal Reserve to cut interest rates immediately. Rates today are just below 2.5 percent, and President Trump and his economic adviser Larry Kudlow want to see rates at about 2 percent. Investors seem to agree, as Wall Street is already pricing in a rate cut for later this year. Most independent observers in the US are forecasting slowing economic growth.
At the same time, reports CNBC, Fed Chairman Jerome Powell’s dovish March 20 announcement of no change in interest rates set off a week of upheaval in global bond markets, with yields spiraling lower. Expectations of lower interest rates are fueling concerns about a weaker global economy, intensified by fears of what may happen in Europe and uncertainty about a US-China trade deal.
But, leaders in the commercial real estate industry have already said they are anticipating a rise in interest rates, according to Seyfarth Shaw’s 2019 Real Estate Market Sentiment Survey. Amid concerns that the current growth cycle will come to an end, ninety-one percent of respondents said they expect at least one interest rate hike this year, with 6 percent projecting as many as three. The real estate industry sees Fed policy and political and stock market volatility as indications that higher interest rates are on their way.
The one thing we know for sure is that interest rates won’t stay low forever. With a variable rate mortgage tied to the prime rate, monthly payments will rise as rates go up. Business owners with commercial property debt tied to an adjustable rate should protect themselves and their clients by refinancing with a fixed-interest SBA 504 loan. To refinance a government loan (ineligible for the SBA 504), a fixed-rate Liberty SBF conventional loan will do the trick.
Now is the best time to lock in a fixed rate loan while interest rates are still at historic lows. We can get the job done in 45 days or less. Contact us today to get started.