Do Federal Interest Rates Affect Hard Money Loans in Houston?

Percentage sign to show interest rates for hard money loans in Houston

As you likely know, the Federal Reserve recently increased federal interest rates. There may be even more interest hikes to come. Because of this, many people have asked whether these federal interest rate increases affect hard money loans in Houston. We’ll explore this topic in detail in this article.

Are Hard Money Loans in Houston Affected by Federal Interest Hikes?

Percentage sign to show interest rates for hard money loans in Houston
Interest rates for hard money loans in Houston are usually dependent on the deal.

So, does the federal interest rate affect rates or other elements for hard money loans in Houston? The most basic answer is: not really. 

Federal interest rates are essentially how much interest it costs banks to borrow funds from their reserves at the Fed. As such, federal interest rates frequently affect mortgage rates, though somewhat indirectly. Conventional lenders typically use federal interest rates to essentially try to predict what the market will look like. However, typically traditional lenders will increase their rates when the Fed does. 

By contrast, hard money lending in Houston relies on private funds from individuals and groups. Therefore, the Federal Reserve has little to do with where the funds come from for your hard money loan. As such, typically there’s little impact on hard money rates when federal interest rates increase

How Does Interest Rates Work for Hard Money

Of course, this begs the question, what does affect interest rates for hard money loans in Houston? Since hard money lenders have a lot of flexibility around loan details, it actually depends on a lot of different factors. In fact, hard money interest rates can vary from loan to loan, since loans are based on the deal. 

Generally, there are a few things that might affect your hard money loan interest rates. This primarily comes down to supply and demand. For instance, how much capital is available in the market, current real estate prices, and how many people are looking for private money lending in Houston. Other factors like loan to value and the property itself can also impact your interest rate for hard money loans, though typically to a lesser degree. 

If you’re wondering what rates you can get for your hard money loans in Houston, you should talk to our team about your funding needs and what solutions we have for you.

Private Money Lending in Houston from Texas Funding: Solutions for Real Estate Investments

If you need funding for commercial real estate, contact our professionals at Texas Funding. We are a leading provider of hard money loans in Houston and can design loan terms customized to your needs. We offer over four decades in the business and are confident we can meet your hard money loan needs. Our team offers direct lending with minimal paperwork and short closing times even if you have low credit scores. Reach out now to get funding.