Commercial real estate owners caught a break with interest rates coming into 2019. With inflation staying under control, banks now have a larger appetite and are offering better terms and fixed rates. This causes a huge opportunity for owners to review portfolio rates before interest rates increase.
About the Anticipated Interest Rate Hike
Rates were initially expected to rise substantially in late 2018 through early 2020, but didn’t rise as expected due to inflation staying surprisingly intact, among other factors. This caused the Fed to be less aggressive with interest rate hikes and led to stagnant rates. Commercial real estate owners could forget about their loan interest rates for a while and stay status quo.
While commercial real estate owners got lucky with this situation, it’s important to take advantage of this window of opportunity before rates inevitably increase.
Opportunity for Commercial Real Estate Owners
The next several months should be a prime opportunity to take permanent measures. With banks offering better packages, some can provide 7-10 years fixed rate loans with a 20-25-year amortization on owner-occupied property. Typically, commercial loans are fixed for only 3-5 years. Investment real estate can be 5-7 years.
Now is the time for a portfolio review to determine “bankability”, and possibly opt for a longer-term structure. Look at your properties the same way a bank would, and evaluate how your banking institution is working for you. A different size or type of bank might be best for your needs.
Interested in learning more about finding the right bank and financing for your business? Contact an Anders advisor.
