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Betting on Interest Rates

How long do we really think interest rates will stay down? It’s probably the most important question facing real estate players today. Low interest rates have allowed many borrowers to sidestep default or foreclosure and enabled refinancing at lower rates than original mortgages. In fact, low rates have allowed the industry to steer mostly clear of the cliff of hundreds of billions of dollars of commercial mortgages refinancing in an environment where many borrowers struggle with balances at or above property values. Simply, they have prevented a debacle.

By Jonathan D. Miller | Updated on August 20, 2012

How long do we really think interest rates will stay down? It’s probably the most important question facing real estate players today. Low interest rates have allowed many borrowers to sidestep default or foreclosure and enabled refinancing at lower rates than original mortgages. In fact, low rates have allowed the industry to steer mostly clear of the cliff of hundreds of billions of dollars of commercial mortgages refinancing in an environment where many borrowers struggle with balances at or above property values.  Simply, they have prevented a debacle.

Of course, the Fed has been artificially keeping rates low at any cost (including killing investment prospects for many savers), because the economy has been so lackluster, and prospects for much improvement over current sluggish levels seem remote.

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