Funding
interest rates tend to rise, making borrowing more expensive. Conversely, during economic downturns, interest rates typically fall to stimulate spending. Investors should track these trends and consider how future changes might affect their investments, whether they are looking into multifamily housing or office real estate investments. GDP Gross domestic product (GDP) growth reflects the overall health of an economy. Strong GDP growth can lead to higher loan rates as demand for credit increases. However, a robust economy also presents opportunities for property value appreciation. Investors in single-family housing or retail properties can benefit
Investors should stay informed about these policies as they directly affect borrowing costs for investment properties, including retail and office real estate. HOUSING MARKET REGULATIONS Government regulations in the housing market, such as tax incentives or restrictions, can affect loan rates and the availability of financing. Favorable regulations can make financing more accessible, while stringent regulations might limit borrowing options. Investors should pay attention to regulatory changes that might affect their ability to secure loans for single-family homes or other types of properties. INTERNATIONAL TRADE Global trade dynamics influence local economies and, consequently, loan rates. Trade agreements or disputes can impact economic stability and interest rates. For instance, a trade dispute might lead to economic uncertainty, causing interest rates to rise. Investors in mixed-use and office real estate should be aware of these global factors as they plan their investments. GLOBAL FINANCIAL MARKETS Global financial markets are interconnected. Economic trends in major economies like the U.S. or European Union can influence loan rates worldwide. Understanding global market trends helps investors anticipate changes in loan rates and make informed decisions. For those investing in multifamily properties, staying updated on global financial movements is essential for strategic planning. Economic trends significantly impact investment property loan rates. By
understanding these factors, investors can better navigate the market and make strategic decisions. Whether investing in single-family homes, multifamily
units, or commercial properties, staying informed about economic indicators is crucial for success.
DAMON RIEHL
Damon Riehl is the founder and CEO of Investment Property Loan Exchange. He has more than 35 years of lending experience in various asset classes, including commercial and residential mortgage, and small business construction lending. Riehl held top leadership positions as head of commercial lending for Ocwen Mortgage, head of unsecured lending for Citibank, global mortgage leader for GE Capital, and head of construction products at Fannie Mae. He is a member of the Harvard Joint Centers for Housing Studies. Riehl has built six de novo lending platforms and used that knowledge to build and grow Investment Property Loan Exchange and the fintech platform LoanBidz.com. Now that you understand the benefits and considerations you need to take when investing in real estate, you may want to start investing in your first property. One of the first steps is to work out a budget and your financing options. Our team at LoanBidz.com can help you figure out affordable options from the most reliable lenders for your exact needs.
from this by securing loans during times of stable economic growth.
Economic Trends Shape Investment Property Loan Rates
EMPLOYMENT RATES AND BORROWING
Employment rates directly influence consumers’ ability to borrow. Higher employment rates generally lead to higher consumer confidence and increased borrowing. When employment rates are high, lenders are more likely to offer favorable loan terms. This is particularly important for investors in multifamily and mixed-use properties, where tenant occupancy rates are closely tied to employment levels. MONETARY POLICIES Central banks use monetary policies to manage economic stability. Policies like quantitative easing or tightening can significantly impact loan rates. Quantitative easing, for example, involves central banks buying securities to increase the money supply and encourage lending.
INFLATION, INTEREST RATES, AND MONETARY POLICIES SHAPE THE COST OF BORROWING—HERE’S HOW TO STAY AHEAD IN A COMPETITIVE MARKET.
DAMON RIEHL
I nvestment property loan rates are influenced by myriad economic factors. Understanding these factors can help investors make informed decisions and maximize their returns. This article will delve into the key economic trends that
INFLATION Inflation erodes the purchasing power of money, leading central banks to adjust interest rates to control economic growth. When inflation rises, central banks may increase interest rates to curb spending. This, in turn, affects loan rates for investment properties. Investors must be aware of inflation trends and
consider how rising rates can affect their financing costs. For those investing in mixed-use properties, it’s crucial to lock in rates before significant hikes.
INTEREST RATES Interest rates are a primary factor
impact loan rates and provide practical advice for investors.
influencing loan rates. Historical trends show that when the economy is booming,
18 | think realty magazine :: january - february 2025
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