Finance professionals throughout the country are sounding alarm bells that forewarn of an impending rise in interest rates. So, what does this mean for your HOA loan?
HOA’s throughout the country will certainly welcome increased income on reserve accounts as well as lower funding requirements to meet future obligations.
However, some HOAs will not be so fortunate. Many HOAs have unfunded capital expense needs. Those that need to raise funds by borrowing will find their interest rate-related expenses increasing as rates rise.
While many budgets may be able to absorb a short-term interest rate increase, more dramatic rate increases sustained over longer time periods can be dismal to an association. HOAs may need to resize project scopes, assessments may need to increase and association buy-in may wane if borrowing costs are too high.
Rates are still historically low. If your HOA is considering borrowing money it is a good time to test the market. It’s better to be in front of an interest rate increase than chasing an interest rate once the market has changed.
Arch Capital Solutions acts as an advocate for your HOA. We have relationships with lenders who specialize in HOA loans.
In many states, the board may actually have a fiduciary duty to make financial decisions that are in the best interest of their members. Arch Capital Solutions can satisfy those fiduciary duties acting as the HOA’s financial advisor. We help HOAs obtain financing and choose the best proposal from multiple lenders.