Jonathan CroninREI Accelerator, Rei Accelerator · Multifamily Real Estate Investor & Coaching Leader

📉 Here’s why today’s interest rates are impacting the lending market

27 Nov 2024

Watch on YouTube

Single-speaker YouTube video (Jonathan Cronin) explaining how a period of very low interest rates led banks to originate many low-rate loans, and why rising rates now discourage borrowers from refinancing (they prefer to keep low fixed rates rather than move to higher rates). The speaker argues this dynamic leaves many banks 'on the sidelines' with stretched balance sheets because loans aren’t paying off as expected.

Interest rates used to be very low. These banks made a ton of loans. Fast forward two to three years, those loans aren't paying off, right? Because if I have a loan of four and a quarter, even though I might have executed my business plan, I may not refinance, right? Because I'm enjoying my four and a quarter. I'd rather not replace it with seven. A lot of banks out there are on the sidelines because they're not getting the paybacks that they would have expected. So their balance sheet is a little bit stretched.