For Real Estate Professionals Seeking a Market Edge
Fed Likely to Keep Rates Low for Some Time
Federal Reserve Chairman Ben Bernanke recently stated that the recession is “very likely over,” but actions by the Fed do not indicate that the United States is entering recovery. Economists widely believe the central bank will keep interest rates between 0% and 0.25% for some time to come. The Fed is also expected to publicly say very little about its plans to wind down more than a trillion dollars in lending and bailout programs; and it will likely avoid using any enthusiastic language about the nation’s economic outlook.
The Fed uses its rate-setting tool in an attempt to balance unemployment and inflation, typically lowering rates during a recession to boost economic activity and raising rates coming out of a downturn in an effort to stave off rampant inflation. Experts argue that the recovery from this recession is so tenuous that the Fed is right to keep its finger off the rate-hike button at least for now. Unemployment continues to rise, retail sales remain weak, manufacturers´ capacity utilization is at an ultra-low level, and wages are still depressed. Home sales and new home construction are making a comeback, but they are coming off historic lows.
Inflation is not an issue at least for now: as a result of the still shaky economy and low consumer confidence, concerns about inflation have been mostly muted. The Fed however, continues to oversee dozens of expensive and unprecedented economic rescue programs, programs that could contribute to out-of-control inflation if not pared back in time. Most economists believe the Fed is keeping a close eye on any signs of stabilization in the labor, banking, and housing sectors. When stabilization in these areas becomes more evident, the Fed will need to aggressively raise rates and discontinue any emergency lending initiatives; but a majority of forecasts do not show stabilization until the end of 2009 or perhaps the beginning of 2010. Until that time, the Fed is likely to keep rates unchanged so it does not disrupt what appears to be the underpinning of an economic rebound.
We will keep you posted…
Hot Money
Secured and Unsecured Lines of Credit from $1 Million to $8 Million
Penstar is currently working with a lender establishing secured and unsecured lines of credit for owners and developers of commercial and multi-family properties throughout Southern California. The debt provider is underwriting individuals and companies who have high recurring cash flow for unsecured lines, and free and clear properties for the secured lines. The lines are priced at 50 to 100 basis points above the Prime Rate. To discuss, please contact Steven Hamermesh at (818) 883-9609 or Hamer@PenstarAdvisors.com..
Helpful Humor
The best antidote for those challenging transactions is to take a moment to have a hearty laugh. Helpful humor is our way of infusing laughter into your work-week
“Good Points and Bad Points” “The disadvantages are,” he began, “is that there is a chemical plant one block south, and a sewage waste disposal plant one block to the north.” “What are the advantages?” inquired the prospective buyer. “The advantage is that you can always tell which way the wind is blowing” responded the agent. |
30
Day Libor |
10-Year
Treasury |
Prime |
0.32% |
3.74% |
3.25% |
Penstar Realty Advisors can be reached at (818) 883-8600.
Our offices located at:
21700 Oxnard Street, Suite 1870, Woodland Hills, CA 91367