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Friday, January 15 2010 13:33 |
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Interest Rate Prediction
Rates will fluctuate. Though the trend is up. Ten year U.S. Treasury rates increased about 45 basis points following the favorable December Labor Report. Meanwhile U. S. economic growth is on a path to increase at a 2.6% annual rate (some analysts have Q4 growth at 4%) while Germany is on track for 1.6% growth. The institutional play is therefore to sell Treasury bonds and buy German government debt. If the U. S economy continues on its trajectory, the betting is that the Fed will raise rates and that this will happen faster in the U.S than in Europe.
Our prediction: Interest rates will fluctuate, sometimes by quite bit. If you want a 5.5% fixed rate loan and the rates are 6% today; take the example an intrepid Borrower who closed last month: He applied. He received a commitment. He sat on the fence, shopping rates, and one fine day a country he had never considered, Dubai, handed him a 75% ltv, 10 year fixed rate loan @5.5% with nearly $500M cash out.
Do you want a loan that’s a bit cheaper than today’s rates? Well you can’t lock an agency deal today. So just apply. You will probably get your rate because over the next six months, we predict that rates will fluctuate.
Banks loosening up? We sent the package to ten Lenders that had expressed interest in a small owner-user commercial building and received ONE Letter of Interest.
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