Low Rates Create Ideal Refinancing Opportunities, Delta Variant Impacting Growth

<p>The US economy is being driven by opposing forces, making it difficult to predict in the long term.</p> <p>Employment numbers are strong, and the capital markets reacted positively to the news that more Americans are returning to work.</p> <p>However, the Delta variant is spreading like wildfire across the US.</p> <p>“Everyone is clearing watching payrolls. That’s what’s driving the Fed, and that’s what’s driving the market. People are going back to work,” says Thirty Capital Analyst Jay Saunders.</p> <p>“We saw a big rally on Friday based on jobs. The market came down a bit today. Commodity prices, oil prices are all coming down and it’s all being driven by this virus.</p> <p>“People will look at this and say ‘We've got to get a grip on COVID before the economy is going to open up again’.”</p> <p>Jay adds that the market likely won’t respond much to the Consumer Price Index numbers this week, as all eyes remain on virus news.</p> <p><strong>Low Rates, Refinancing Loans, Commercial Defeasance</strong></p> <p>Thirty Capital CEO Rob Finlay reiterated what he’s said in past episodes of CRE Capital Markets Report: “This is a very opportune time to refinance long-term debt.”</p> <p>Rob then posed the question of pros and cons of refinancing commercial property loans, and the issue of commercial defeasance.</p> <p>Analyst Jeff Lee responded: “There’s a lot of history behind that sentiment. Volatility drives a lot of calls and questions.”<br /> Look At Remaining Term-To-Maturity On Loan, Not The Ten-Year</p> <p>“Whether the Ten-year moves from 1.10, 1.12 or up to 1.30 within a week, if people are going to ask what is that going to do to my defeasance costs or my yield maintenance or whatever fixed-term, early-exit scenario they're looking at . . . The big thing to always remember is everything is pegged off of your remaining term-to-maturity on your specific loan,” explains Jeff.</p> <p>“Going back to basics, you’re not looking at the Ten-year as a driver of your extra costs. That is generally mismatched to the longe