Money Matters – What’s the Fed Thinking?

In our last update I was doubtful of any rate increase this year. Now with China falling, clearly there is fear of contagion to other parts of the world. We’re seeing some of the fear with the recent sell-off in the U.S. markets. Foreign countries will continue to push their rates down in the hopes that they can help their economy which will also create heart burn for the Federal Reserve to raise U.S. Rates. Sometimes when you wait too long you lose the opportunity and it becomes even harder to pull the trigger and this is shaping up to be one of those times. Indecisiveness by the Fed may have pushed any rate increase out to well beyond Q1 2016.

All of this bodes well for mortgage interest rates! Although the recent drop in rates hasn’t been as fast as one would expect, I think it’s best to be prudent and wait. All of the rush to lock in longer term fixed mortgage rates are over blown. Yes long term fixed rates are great but they do not apply with a broad brush approach to all loans and all situations. Sophisticated analysis and planning is the only way to determine what the best strategy is for any specific property.

With over 25 years of experience, we are here to provide guidance as needed.

Money Matters – Fed Speaks!

Our fearless Federal Reserve Chairman Yellen has spoken! In a statement recently released, “some” further labor market progress was needed prior to a rate increase. Earlier this year, the chances of a rate increase going beyond June was close to nil. Now there may be an increase in September is the consensus among the experts. I still am of the opinion that any rate increase will not come until December at the earliest, but most likely rate increases will not start until after the first quarter of 2016.

For years now, we have been talking about labor markets, lack of wage pressure and lack of inflation as major concerns. Not much has changed. Real inflation is still dormant and I see that as a major concern. Add to it global issues like China’s market among many others and there are sure to be more issues that will continue to spook the Fed from raising rates.

In the interim, money for loans is abundant. Lenders are actively and aggressively bidding for good loans to good borrowers. As an example, we recently closed two construction loans totaling $27,600,000 for the development of two large homes for re-sale. Or, a $6,225,000 acquisition of a newly remodeled mixed use project that consisted of live work lofts and retail.

Whatever your financing needs, we are available to review, assess and provide options!