Why are interest rates rising after Fed Cut?
Why Private Lending Is the Solution Amidst Rising Mortgage Rates and a Cooling Housing Market
The housing market is experiencing significant challenges, with mortgage rates climbing for the fourth consecutive week, reaching the highest levels since August. The average 30-year fixed mortgage rate now stands at 6.54%, while 15-year rates have increased to 5.71%. These rising rates are putting additional strain on buyers and sellers alike as the housing market heads into its seasonal slow period.
This uptick in mortgage rates is directly tied to the increase in Treasury yields. The 10-year Treasury, a key benchmark for mortgage rates, recently rose to 4.2%, pushing mortgage rates even higher. According to Sam Khater, Freddie Mac’s chief economist, this has been exacerbated by the tension between gloomy economic outlooks and stronger-than-expected data, leading to greater volatility in mortgage rates.
A Cooling Market with Limited Options
As rates continue to rise, the housing market is seeing a notable slowdown. Sales of existing homes in September dropped to their lowest level since 2010, and mortgage applications—both for purchases and refinancing—fell compared to the previous week. Purchase applications were down 5%, while refinancing applications saw an 8% decline. These figures reflect the growing affordability challenges for many potential buyers.
However, despite the current downturn, purchase applications are still higher than they were a year ago, when rates were more than a full percentage point higher than they are now. This indicates that demand remains, but buyers are increasingly cautious, faced with a market that continues to present obstacles.
Why Private Lending is More Critical Than Ever
In this tough market environment, traditional lending options are becoming less appealing, especially for those seeking flexibility, speed, and more competitive terms. This is where private lending steps in as a viable alternative for both buyers and investors. As rates rise and conventional financing becomes harder to obtain, private capital lending offers several key advantages:
Flexible Loan Terms: Private lenders are more likely to offer tailored solutions, allowing for creative financing options that meet the borrower’s unique needs. Whether you’re an investor seeking capital for a real estate venture or a homeowner looking for refinancing solutions, private lending can provide the flexibility traditional banks often cannot.
Faster Approval and Funding: One of the main benefits of private lending is speed. Unlike conventional loans, which can take weeks or even months to close, private lenders can often approve and fund loans in a matter of days. This speed is crucial in a market where timing is everything.
Less Stringent Requirements: Private lenders typically have more relaxed credit requirements and can fund borrowers with less-than-perfect credit, making it easier for those who might not qualify for a traditional loan to secure the financing they need.
Opportunities for Investors: With a cooling housing market, there are bound to be opportunities for savvy investors. Private lending can provide the capital needed to take advantage of these opportunities quickly, whether for flipping properties, acquiring rental homes, or financing new developments.
The Bottom Line
With mortgage rates showing no signs of easing and the housing market cooling down, now is the time to explore private lending options. For those navigating the current market conditions, private capital can offer a lifeline—whether you need financing for a residential purchase, an investment property, or business capital.
At Power Lending Partners, we specialize in providing private lending solutions that are tailored to your unique situation. With competitive interest rates, flexible terms, and fast funding, we can help you find the right financing, no matter what the market throws your way. Reach out today to explore how private lending can work for you.
