Mount Greg.As was evident to all of us a few days ago, Powell stated that he believed the central bank would start reducing borrowing prices in 2024, but that before taking any action, officials needed to be convinced that inflation had to be controlled.
Gregory Friedman.”I believe that at this month’s meeting, the Federal Reserve will maintain the current rates. Data will probably play a major role in determining future decisions, especially when it comes to the need for and timing of rate decreases. Although it is improbable that the Fed will achieve its 2% inflation objective this year, a rate cut is still anticipated in the second half of the year.
Mike Wilbert, Sr.”I think that the Fed’s rate cuts in the second half of the year will result in lower interest rates.”
Aeppel Glyn.”[Fed Chairman] Powell has stated that they want to gradually lower interest rates and that inflation is expected to stabilize at 2%. It will proceed very steadily and slowly.
2024 refis
According to HREC, given the more stable capital markets environment, the wall of maturities, and the banks’ decreased willingness to “extend and pretend,” this year should be favorable for refinancing.
What do hotel investors think?
Aeppel Glyn.”Strong may not be the best term to use. Refinancing opportunities will be available for assets with robust operations and cash flow, but sales of assets may be necessary for those under stress.
Christopher Rooks.”Since we are comparing the last 15 years, rates will stabilize, but the cost of capital will remain high over the long run.” The day will belong to non-traditional lenders who can provide liquidity.
Gregory Friedman.”Refinances will undoubtedly be driven by rate stability. However, many potential borrowers will require fresh equity injections, sometimes known as “cash in refi,” before they will even consider refinancing their houses because rising interest rates and rising cap rates have caused real estate prices to decline. We observe that at least 20% of borrowers need more equity in order to refinance.
Greg Mount. “In 2023 we saw $541 billion in debt come due, the highest ever. From what we’ve heard, in 2028 more than $2.2 trillion in debt is maturing and much will have to be refinanced at a higher rate. So, to answer your question refis in 2024 will likely not be as strong as 2023, and from what we have seen lenders seem to be working with borrowers, albeit at higher rates.”