60 Seconds With Steve: Best Time to Borrow is Now

60 Seconds With Steve: Best Time to Borrow is Now

In 60 Seconds With Steve, he discusses that even with tumbling stocks, the best time to borrow would be right now.

I guess the markets are finally taking the coronavirus seriously. The worst may yet to come, at least for the virus. Monday’s more than 1,000-point plunge in the Dow shocked a lot of people, but we need some perspective. That drop is just over 3%, not that much of a plunge when you put it into a historical perspective.

On October 19, 1987, after just one year in the senior living business, I checked into a hotel in Pennsylvania for a state conference. I turned the TV on and saw the merely 508-point drop in the Dow on the screen. But that was a 22.6% plunge. Think of that: 22.6% vs. 3.6%. I thought life was over. I thought 1929 all over again.

But everything recovers, eventually. It took two full years, in late 1989, for that one. But another thing happened with Monday’s meltdown. Investors sought safety, so the 10-year Treasury note yield fell to 1.37%, just five basis points above the record low. That occurred in 2016 after the Brexit vote. Yesterday, the yield dropped a bit more.

If there was ever a time to borrow, it is now. Yes, yields could still decline further, especially if the coronavirus turns the world economy, and ours, into a recession. Whether you want to go the HUD route, Fannie Mae or Freddie Mac, bank debt, insurance companies or anything else, you would be hard-pressed to find better rates than today. Time to refi that loan. What are you waiting for?

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One thought on “60 Seconds With Steve: Best Time to Borrow is Now

  1. Tulip Mania in assisted living, Steve. North of Boston is over-built and this relatively young industry is experiencing the tension between existing operators and people trying to break into the business. Drug stores, hotels, restaurants and walk-in medical clinics are on every corner. So it’s a good time to borrow but sufficient capitalization and a realistic business plan are, I think, the banks’ responsibilities.

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