Want To Borrow Money? Do It Now While The Cost Is Low
It’s an ideal time to borrow money, because the cost is relatively low. So, says the Thirty Capital team of analysts, if you can get money, get it now.
In today’s CRE Capital Markets Report, Thirty Capital CEO Rob Finlay says anyone with a loan that has less than four years and some liquidity in it should be running an analysis and thinking about refinancing the loan.
“You’ve got low rates and hungry lenders,” observes Rob. “We are seeing new ones in the market and ones that have been on the sidelines are out there financing.”
Expect a Turbulent 4th Quarter
There are many factors at play in the market right now, including the end of unemployment enhancement, supply chain issues, tapering, and the potential of rising inflation in coming months.
Explains Analyst Bryan Kern: “With 50% of the States ending federal unemployment enhancement by July 10 we should start seeing some employment reports tick back up. Remaining states end in September, so that trend should continue.
“If we get the beginning of a taper or mentions of a taper in the 4th quarter, that fourth quarter or even the last two months of this year could be extremely volatile.”
Rob agrees, noting that right now supply chain issues are contributing to rising inflation.
Market Anticipating Rising Inflation
Analyst Jay Saunders notes that the market is trading on consumer confidence right now. The Feds continue to push the line that inflation is transitory, but most market analysts think otherwise.
“The Fed speak is to continue to have patience in rates and movement,” Jay observes. “But I think for the market as a whole it gets harder and harder to buy it. Right now the whole market is just trying to figure out where, when, and by how much the Fed will move.”
Layering On Forward Hedges
Bryan believes that the market has tested the bottom of the reading range for the ten-year.
“We're now hovering around this 150 level, and we actually had a few clients take advantage of the depth by layering on some forward hedges. This is something that folks should be looking at, if they feel like rates are going to pop up towards the end of the year.”
He adds that July tends to be slow when it comes to rate moves, and things are expected to pick up in August and September.
Rob notes that forward hedging requires collateral, so it’s really only for investors with deep pockets and liquidity.
Increase in move to SOFR
Jay notes an uptick in SOFR continues as more banks originate loans in that index. SOFR is trading at five basis points following the Fed’s move to increase the reverse repo rate.
But right now, says Jay, all eyes will be on the employment numbers, set for release on Friday.