The 10 year Swap rate vs. the 10 year fixed mortgages banks are offering for commercial properties have increased to .73%, roughly 3/4% better
for swaps as of today June 30th, 2014. This begs the question should borrowers actively pursue this opportunity giving the possibility interest rates
may increase going forward. In general, bank rates have been increasing since November , 2013 because of the perception that the cost of borrowing
funds banks need to borrow to lend out. At the same time , since the beginning of 2014, short term money rates have falling , causing swap rates to
fall. Swap rates are generally based on short term rates. Because swap rates and bank rates are going in separate directions, i.e. divergence, this
presents borrower a substantial benefit to lock in a 10 year rate that is 3/4% of a point below what banks are offering. We as a firm can guide you this
decision and whether you call us or not, swaps are very complex , and you should consult with your advisors whether this works for you.
Edward Voccola, LLM 617-233-5555
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