How Long Can Low LIBOR, 10-Year Treasury Last? - Interest Rates via Multifamily Executive Magazine

The yield on the 10-year Treasury has been so low for so long that you can excuse borrowers for being lulled into complacency.

For the past 18 months, multifamily borrowers have seen some of the lowest fixed rates in history, giddily locking in long-term rates that begin with a 4. And floating rate borrowers are all smiles as well—the one-month LIBOR has been less than 36 basis points (bps) since May 2009.

But how long can this dynamic last?

“What goes down must come up,” quips David Brickman, who leads the multifamily division for McLean, Va.-based Freddie Mac. “Nobody could’ve guessed how steeply rates would fall, and you have to run that in reverse. Just when everybody believes we’re in for a long run, that’s when things get shaken up.”

The government-sponsored enterprises (GSEs) have been the multifamily industry’s stimulus plan, and the resulting competitive landscape, combined with the Federal Reserve’s Quantitative Easing program, means that these low rates will continue in the near term.

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