Now may be the time to refinance business loans

8/12/2011

Despite the rocky stock market in recent weeks, now may be the best time to refinance business loans.

According to the Mortgage Bankers Association, loan applications increased nearly 22 percent in the first week of August. The rise may be due to the Federal Reserve's recent announcement that interest rates will remain steady at the current low rates, at least until mid-2013. The slow recovery from the recession and new stock and housing market turmoil may have led the federal committee to keep rates low in an effort to foster economic growth and boost lending activity.

"Amid substantial market turmoil last week, mortgage rates dropped to their lowest levels of the year, and refinance applications jumped more than 30 percent to their highest levels of the year," noted Mike Fratantoni, vice president of research and economics at MBA.

"Over the past month," he continued, "refinance application volume has increased by 63 percent."

For businesses with a higher than average rate, those able to garner better terms thanks to boosted credit or sales and companies worried about the risk of keeping adjustable rates, the Federal Reserve's announcement may mean a smaller monthly commercial loan payment.