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Consider Fixed Rate Commercial Mortgages as Fed Raises Benchmark

Commercial Mortgage
Posted on 
June 14, 2018

The Federal Reserve raised its benchmark by a quarter of a point at its Wednesday meeting, and policy makers have stated that they expect two more rate increases this year, according to CNN.

The federal funds rate, which affects rates for mortgages, credit cards and other types of borrowing, was lifted to a range of 1.75% to 2%.

“By just tapping the brakes more quickly, but not harder, the Fed is showing it’s willing to let the economy and the expansion run,” said Robert Frick, corporate economist with Navy Federal Credit Union.

The Fed did cite a strengthening economy for its decision to raise the federal funds rate. Unemployment is at its lowest rate since 2000 at 3.8% and inflation is starting to creep upward.

“The main takeaway is that the economy is doing very well,” Fed Chairman Jerome Powell said at a news conference. “Most people who want to find jobs are finding them, and unemployment and inflation are low.”

With this increase in the federal funds rate and two more expected in 2018, brokers and borrowers alike can expect higher borrowing costs moving forward. Now is a great time for brokers to consider that fixed and fully-amortizing commercial mortgages might be the best option for many of their borrowers. These types of mortgages afford your borrowers more control over their finances with consistent customer service and no surprise increase to their monthly payments.


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