Interest rate prediction

Board Topic: Where does everyone see interest rates goin?
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Where does everyone see interest rates goin?

Posted by: meagain Dec 7 2004, 10:57 PM
Would be interested in everyone's opinion/guess on where the rates are goin.....and where they will be next year

Posted by: loanuniverse Dec 8 2004, 08:47 AM
Dealing with bank commercial lending, I only look at a couple of rates and all of these rates have gone up in the last year.

Prime rate has gone up 1% in tandem with the fed funds rate.

LIBOR has gone up about one percent also.

The 5-year T-bill has gone up about 40 basis points.

Funny thing is that the mortgage rates are essentially at the same level that they were a year ago, and I know this is true because I just checked them.

Frankly, I would not be surprised if short-term rates that are relied more by commercial lending keep going up. The Fed increased the Fed funds four times in the last six months, and it could raise them again in 2005. I remember doing income producing property deals based in prime at 9%. That was not long ago so I can understand how we can get back to that number in just a couple of years.

If I knew how to predict interest rates, I would be a very rich man, but I am going to pick a number anyway. This time next year {December 2005}, Prime will be at 5.5%

Posted by: Commercial Lender Dec 9 2004, 08:59 PM
From a commercial prespective, i expect a 25 Basis point hike on Dec 14th when the Fed meets. And i def agree with admin that we will see prime reach 5.5-5.75 by Aug of next year before coming down. Of course LIBOR will follow eventually.....One would expect this to put a dampe on the lending industry but i cant say that i am seeing commercial volume go decrease. It has not only remained steady but is growing.

Posted by: avatarfi Dec 10 2004, 02:08 PM
I'm not sure that commercial follows interest rates as directly as the residential sector does. I anticipate a growth in commercial real estate lending and construction over the next 1-2 years at least, while the residential market is due for a slowing of growth at the least.

Posted by: Commercial Lender Dec 15 2004, 09:40 PM
I agree with you that growth will be there. We are seeing business increase despite the rate but as i and (everyone west on me on Wall street expected) a 25 bps hike did go in to effect. I suspect they will skip the next meeting and then add another 25 Bps just to have an insurance policy in their pocket. The fed so far has done a great job hinting and letting the markets a have aheads up on the hikes. We have the next few months to see what heppens with the currency situation and the war.
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