📉 FED Rate Cuts equals investment incentive for STR & CRE investors

[AJ Wong]

The FED went BIG with a half of percentage rate cut at today's meeting and indicated an additional .5% before the years end. 

The initial effect on mortgage rates was a subtle increase in long term bond yields, however in comparison to earlier this summer residential and commercial mortgage rates are down considerably.

For example commercial lenders were in the 7%++ range just a few months ago, and recently are as low as 5.5%-6% and falling. Particularly on larger balance CRE (Commercial Real Estate) this rate improvements can lead to a dramatic increase in activity and investability.

Mortgage application activity has already seen a bump as primary mortgage rates are nearing twenty month lows around 6%, FHA in the very low 5%'s (and I've even heard of 4.875%'s floating around..) with DSCR rates now in the low to mid 6%'s depending on credit profile.

The shift in rate environment could also accelerate the luxury STR market as inventory is exceedingly low and jumbo rates have fallen precipitously.

RE Professionals should prepare for an active Q4 and investors looking to close deals before year's end are recommended to get their financing and property search profiles clarified, and then...step on the gas. 

Good luck!