The market has experienced a good amount of turmoil the last several days, but in my opinion the commercial real estate sector has & always will weather the storm in the long run. The key to riding out tighter markets is conservative leverage and predictable fixed payments. Since the last financial crisis the market has become all too accustomed to cheap money, but I believe today is still a good time to lock-in a long-term fixed rate product. Owning real estate is a “long game”. Sure, you may happen to time the market and make a quick buck, but for the most part real estate has always faired well under inflationary pressure. From my experience, if one is able to hold on to their real estate assets long enough, 10-15 years, property values will return.
It’s my opinion that interest rates are on the rise and I believe the 10-Year T-bill will be above 3% in the first quarter of 2018. That may seem high in comparison to the low of 1.37% in July of 2016, but it’s still historically low in comparison to 5.14% in June of 2007 or around 15% in 1981.
Although much of the developed nations have federal funds rates well below ours, the world economy is an expansionary period and these rates will rise.
In conclusion, interest rates have ticked up the last few months, but they’re still historically low in comparison to the last 30 years. We’re currently pricing 10 & 15 year fixed rate products in the high 4’s to mid 5’s. Feel free to reach out to discuss further.
Locking in long-term fixed rate financing is one way to mitigate interest rate