The market hints at a further interest rate cut, as evidenced by the ongoing inverse yield curve. However, this situation also presents opportunities for real estate investors at this moment. Our partner and credit specialist Drs. Art Nijhuis explains why.
Nijhuis: “For about a year now, there has been an inverse yield curve in the European market. This means that the capital market rate (long-term rate) is lower than the variable rate (short-term rate).
Normally, the long-term rate is higher than the short-term rate because investors and banks typically demand higher returns when they invest their money for a longer period. Think of mortgage interest rates, which usually increase as you choose a longer fixed-rate period.
The current inverse yield curve implies that the market is anticipating future interest rate cuts. This seems justified by the significantly reduced inflation and the resulting reduced need for further interest rate hikes by the ECB.
As a result of the inverse yield curve, loans with longer maturities have become relatively cheaper: all future expected interest rate cuts are already priced into the interest rates for these loans.”
What does this mean specifically for (Dutch) real estate investors?
Act now before the yield curve flattens again and then usually steepens relatively quickly. So, don’t wait too long and take advantage of the current market imperfections. Fixing the interest rate for a longer period is often rewarding now; active interest rate management is the key. The current interest rate differential priced in by the market can more than offset refinancing costs.
Novel Finance
Novel Finance is the specialist in real estate financing. We arrange numerous financings annually for real estate investors and developers and have access to:
All Dutch (real estate) banks All Dutch specialist real estate financiers All German, English, and other international (real estate) banks that finance in the Netherlands All relevant debt funds Numerous private real estate financiers and investors We oversee the entire real estate financing market, enabling us to select the most suitable providers for you and secure the best conditions from the market. We not only rely on our knowledge and experience but also on our software that allows us to compare current interest rates and financing conditions of relevant lenders.
The financing market is always evolving. We map out the market for you and keep track of it. Moreover, we always negotiate the best conditions for you as an independent advisor. Feel free to visit us for an introduction at our office.