Welcome to the Money Rep

For those who are new here, we’ve been closely monitoring the 5-year US Treasury rate, which serves as the base rate for many commercial lenders when pricing loans. Below are the average 5-year Treasury rates over the past three months:

• September: 3.47%
• October: 3.91%
• November: 4.23%

Key Insights

1. Rates Continue to Rise, But Volatility Is Easing
The upward trend in rates is clear. However, November brought some relief in terms of volatility. The spread between the highest and lowest rates in November narrowed to 27 basis points (0.27%), compared to 64 basis points in October.

Additionally, the 5-year Treasury rate fell from its November peak of 4.30% to a low of 4.05% in the final days of the month, offering a glimmer of hope for some rate stabilization.

2. What to Expect in December
While we’re encouraged by the recent drop toward the 4.00% mark, the 5-year Treasury is likely to face resistance around that level. If it does dip below 4.00%, it probably won’t stay there for long before trending back up.

Looking ahead, we anticipate the 5-year Treasury to fluctuate between 4.00% and 4.30% throughout December.

Impact on IAACU Members

For IAA Credit Union members with commercial or small business loans:

• Commercial Real Estate Loan Rates are projected to range between 6.75% and 7.10%.
• Equipment Loan Rates typically run 0.50% to 1.00% higher than real estate loans.

Our Recommendation

With no clear drivers expected to push rates significantly lower, now may be a good time to lock in your interest rate if it fits your budget.

We also recommend choosing a lender like IAA Credit Union, which offers a free, one-time float-down option on commercial loan rate locks. This flexibility can help you benefit if rates drop after you lock in.

If you have questions or want to learn more about rate lock options, feel free to contact us—we’re here to help!

 

Contact our Small Business Team.

Read our November 2024 Market Rate Update.