Overcoming The Obsession With High Interest Rates!

It is soooo frustrating when people can’t see past an obstacle or challenge! If you obsess over the challenge or obstacle, you will not be able to see the solution! There are so many folks paralyzed by the high-interest rate environment.  Yes, rates have gone up!  Yes, it increases the cost of borrowing!  But let’s not forget that interest rates go up and then come back down!

I also hear bankers talking about deals drying up when rates are high! Yes, there will be less deals…but there will be deals that need to get done whether rates are high or low.  You need to go look for those types of deals!  Go look for clients or prospects that need to refinance maturing debt or those that are hunting for investor CRE opportunities.  What about the high interest rate environment?  Well, what is wrong with variable rate loans?  Nothing! 

Why would you steer someone into a variable rate loan during a high-interest rate environment?  The client or prospect has three options:  do nothing, take a high fixed rate or take a variable rate. If they choose to do nothing, they might miss out on great opportunities due to the CRE market cooling down and cap rates going up.  If they take a fixed rate loan, they are possibly stuck with it until it matures because of a possible prepayment penalty situation.  If they take a variable rate, they can refinance when the interest rate environment stabilizes.  If available and if the borrower is sophisticated enough, it is possible to put an interest rate cap to hedge against rates moving higher.  There are solutions if you start to look past the problem!

If you want a crash course on cap rates and how it impacts CRE, click on the Business Banking News link below (aka blog) and search for “cap rates”. Bizpetrol has information, knowledge and tools that will help you become a Business Banking Rockstar.  You can start elevating your business credit skills using the free Commercial Lending Toolkit at www.bizpetrol.com. You can see all the Business Banking News articles (like this one) at www.bizpetrol.com/blog. You can access a series of how-to business banker guides https://www.bizpetrol.com/Downloads-Free.

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