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It's too early to tell if a recent drop in residential mortgage interest rates to 37-year lows will impact the commercial market, Hawkins Capital principal Jason Galloway said. The company provides short-term financing for commercial real estate projects in Utah and Idaho.
"Down the road, hopefully it will provide some stabilization for consumer spending," he said Dec. 29. "If we can get some stabilization in the residential markets, hopefully people will go out and spend."
Galloway said he does not expect the lower residential mortgage rates to impact the commercial market for several quarters - "if we are really lucky, in the second half of '09. Most likely, we are out another year."
The 10-year Treasury Note yield, the London Interbank Offered Rate and the Prime Lending Rate all have dropped recently, he said. The 10-year Treasury yield went below 2.1 percent near the end of December. It stood at 2.505 percent Jan. 6.
Low interest rates will provide some help, but "there are just a lot of people who will not be able to take advantage of that financing," Galloway said. "Though rates are lower, eligibility requirements have increased. Many folks aren't able to take advantage of the lower rates yet."
Banks are "very selective," he said. "Borrowers who normally could get a loan from banks aren't able to." Securing long-term...