Current debt market rates are volatile, but that’s no reason to put off locking in a long-term interest rate, according to one industry expert.
“In my 25 years’ experience with government-insured debt markets, the last year has shown much more volatility. We are now seeing 20 [basis point] swings in a day, which can mean hundreds of thousands in loan proceeds,” Cambridge Realty Capital Managing Director and Head of Capital Markets Tony Marino wrote in a blog post. “Recently, we have seen the range of rates swing between 15-90 bps within a month, when in times past that would occur over the course of a year.”
Long-term interest rates haven’t seen the extreme swings of the short-term market, but those rates have doubled in recent months, Marino said.
“With this troubling circumstance, new opportunities have been created. There has been a qualitative change in the structure of the market, with the daily, weekly, and monthly swings in these interest rates becoming more extreme,” the expert said.
It still could be a good time to lock in, Marino said. Lenders can help companies keep abreast of current rates, he added, and they can lock in when rates hit a sweet spot.
“Some lenders have the ability to lock your interest rate during a beneficial moment in the markets and hold that rate through closing of your loan,” he said.
As the pendulum continues to swing, it’s possible on some days to lock in when rates fall beneath a comfortable threshold, even for a short time, he noted.
