Interest Rates Update

Last week I was visiting the beautiful state of Georgia and began thinking about interest rates. A month ago I mentioned that the fear of a trade war with China was temporarily keeping rates from increasing and to educate borrowers to lock in their rates. Since then, rates have increased 25+ BPS. I feel that rates will continue to rise for these five reasons:

1.      Don’t bet against the FED!

2.      It’s becoming clear that the U.S. will have little impact with a trade with China. U.S. stocks are booming while China’s are crashing and we’re about to bring in billions more in tariffs than China. This may cause companies to come back to the U.S. to create jobs. I don’t feel that we need to do a deal.

3.      The new trade agreement between the US, Canada, and Mexico replacing NAFTA will bolster the US economy by keeping more automotive jobs here in the country and securing more favorable terms for farmers to export products.

4.      The tariffs could impact inflation lightly such as $200 more for an iPhone, etc. A little more inflation equates to a little higher rates.

5.      The huge tax cuts are in the first stages of increased consumer spending and corporate capital investment to grow companies, employment, and wages. This could be a 3 to 4 year process.

As rates start to rise again, educate people to lock in their rates, even if your pitch is as simple as “don’t bet against the FED!”

Contact all your potential borrowers and agents and tell them to not bet against the FED. Make sure they know that you’re saving them from higher potential interest rates.