A Silver Lining in Rising Rates

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Radius Insights | Resources | CoStar Portfolio Strategy Client Update: Apartment Investors May Find A Silver Lining in Rising Rates

April 05, 2018

Rising interest rates could benefit apartment demand

Rising interest rates may make investors nervous. Concerns about increased borrowing costs, downward pressure on values, and elevated construction prices are certainly valid. But there may be a silver lining for multifamily investors in that rising rates also impact households, and could do so in manner that benefits apartment demand.

The 30-year fixed mortgage rate moves almost in lock step with the 10-year Treasury. As interest rates have risen, so have mortgage rates, leaving fewer households able to afford a mortgage.

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