Mortgage interest rates for this year have managed to defy consumer expectations. According to Fannie Mae’s 2016 National Housing Survey, the majority believed rates were either going to increase or stagnate. Contrary to what was anticipated, mortgage rates actually decreased over the past several months to near all-time lows. Though this development has come as a shock to many, experienced real estate advisors such as Jacob Frydman, a New York-based developer and investor, have foretold of just such an occurrence being an expected possibility in the continuously evolving market.
While quite a number of factors could be contributing to this sudden shift, undoubtedly one of the biggest is the Brexit. “Mortgage rates have been low for years, but the impact of Brexit has brought us close to record lows once again,” Mike Fratantoni, chief economist for the Mortgage Bankers Association, told CNBC, “with jumbo rates already at their lowest levels, giving more borrowers a larger incentive to refinance.” The uncertainty surrounding the European markets in the wake of the event caused many investors to transfer their capital to American mortgage bonds, which are now seen as the safer bet.
Jacob Frydman reminds us that the market is inherently cyclical, meaning that there will always be upturns, downturns, and periods in-between. He has been quick to point out that the most recent decline was somewhat reminiscent of the fiscal crisis New York experienced in the 1970’s, and that the sharp contrast between the city then and now is a perfect example of just how much the economy can transform in a matter of years. Frydman has frequently cautioned onlookers from overly fixating on current short-term trends and advises transferring focus to prospective opportunities which can be developed down the road. Frydman predicted interest rates and, consequently, real estate prices would begin rising during the 2010’s after remaining low for so long, but also prophesized that the market would stabilize again “towards the middle to the end of the decade”. If his predictions remain accurate, then by the 2020’s we should start seeing a return to the historically low rates that will provide brand new options in real estate.
A renowned expert on value added investments, Jacob Frydman has acquired over five million square feet of real estate – with transactions of up to $2 billion – during the course of his 30-year career. He has served as a CEO, Chairman, and CIO of First Capital Real Estate Trust, and a frequent guest lecturer at Columbia University. A Finance graduate of Boston University and Juris Doctor recipient of Case Western Reserve University School of Law, Frydman often participates as a speaker and panelist at numerous industry seminars and on Fox Business, CNBC, Bloomberg Television and other news media, where he speaks on matters relating to property investments and trends in real estate. Having retired from his role as a CEO of a public REIT in 2015, Frydman seeks out special situations where he can enhance a property’s value, which he undertakes alone or at times with partners.
Jacob Frydman (@jacobfrydman) – Twitter: https://twitter.com/jacobfrydman
Jacob Frydman – Huffington Post: http://www.huffingtonpost.com/author/jacob-frydman