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504 Rate Update

504 Program Rate Update for January 2015

4.601% – 20 Year Debenture Effective Rate *

4.416% – 10  Year Debenture Effective Rate *

“There is a floor down there…somewhere.”

Welcome to 2015, the year in which long term interest rates will start to rise. Seriously. However, until then…

Chart and Statistical Data is from September 2006 to January 2015

Debenture Rate 10 Year T-Note
Spread Over T-Note
Jan 2015
2.01% 0.51%
3.07% 0.86%
2.98% 0.66%
0.009519184 0.006055493

Underlying 504 twenty year debenture rates continued a trend from the final quarter of 2014, falling in tandem with the Ten Year Treasury to reach 2.52%. This reflected a Treasury rate of 2.01% at the pricing, though Treasury rates have since dropped further, closing at 1.94% last week.

It is worth noting, that during the same period the spread to the Treasury widened, from 0.42% to 0.51%; a 21% increase. Perhaps this is an indication of a floor? Investors requiring a higher spread would indicate a sense of impending rate movement, even a turn in the underlying trend for long term rates.

Calling a bottom is easy, once you are climbing off it. The point is not to time the absolute nadir, but to catch the trend. For 504 applicants and their permanent lenders, the implication is clear: time is not your friend. Expedite the debenture funding or bear the risk of higher long term rates.

If your current CDC seems to lack a sense of urgency, perhaps you need to find one with clarity of purpose? We welcome the opportunity to earn your business.

We welcome the opportunity to earn your business.

* Note: Rates are subject to credit determination & auction pricing. Past performance is no guarantee of future results.

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South Central Tennessee Development
101 Sam Watkins Blvd.
Mount Pleasant, TN 38474
Office (931) 379-2918
Fax (931) 379-2640

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