Rising Rates: What Multifamily Investors Should Know

Kurt Stuart, Head of Northeast, Commercial Term Lending, JPMorgan Chase

With the Federal Reserve’s recent 25 basis point increase to the federal funds rate, and its intention to raise rates twice more in 2018, commercial real estate investors face questions on how best to approach rate resets and loan maturities. Here’s what multifamily investors should be thinking about today.

The Federal Reserve’s interest rate normalization process continued in June with the Federal Open Market Committee’s (FOMC) announcement that it raised the federal funds rate by 25 basis points, to a target range of 1.75% to 2.0%. This is the second rate hike in 2018 and the seventh since normalization began in December 2015. As normalization progresses, multifamily investors should consider how a higher rate environment might affect their portfolios, and perhaps more importantly, determine the proactive steps they can take to best position them for the future.