Home Interest Rates Are Low, Commercial Rates, Not As Much
Interest rates from home loans are at 40 year low. Why aren’t commercial business loans following suit? Simple, they are not based upon the same lending index, so they respond differently. A commerical motgage is commonly based on yields of treasuries, swaps, corporate bonds or commerical mortgage backed securities. Typically based on an index such as LIBOR. Home mortagages tend to move more quickly and are influenced by other factors and indexes. Often when bond rates (yield) goes up, so does interest rates. Although commercial lending rates will move in the same trend as residential rates, they often will not move identically or with the same rate of change.