Now is the time to lock in a fixed rate commercial real estate loan!
The Federal Reserve announced a surprising 1% cut in the Fed funds rate today, lowering the fed funds rate to 0%, the lowest since the financial crisis over 10 years ago.
If you have a commercial real estate loan coming due this year, or next, I would highly suggest you look to lock in a rate and work to get your loan closed in the next 30 days!
Interest rates may stay close to this level for some time, but once the significant and valid concerns over Covid 19 are eased, and the economy gets it legs under it again, interest rates will begin ticking up.
Also, commercial real estate lenders will get more strict with their approval process as they see the economy slowing. Lower loan to value offers, higher minimum credit scores, larger interest reserves for future monthly payments and property tax and insurance will be held back out of loan proceeds.
There is plenty of capital already raised by non bank lenders. They need to put that money to work to produce a return for their investors, But, they do not want to lose the principal and be stuck with a non performing loan with the properties they lend on. So even non bank lenders will begin to underwrite to a more conservative level.
I would not hesitate if I owned any commercial property, I would begin the refi process now, not later.