How Rising Interest Rates Affect the SBA Secondary Market

July 8, 2015

By Bob Coleman
Editor, Coleman Report

Bob Judge is the recognized national expert in the valuation of SBA-related assets and the SBA Secondary Market.

Bob Coleman: How do rising interest rates affect premiums?

Bob Judge: Basically, rising rates will push borrowers who have floating rate loans into trying to refinancing for fixed rate loans. Rising rates will cause them to have higher rates on their loans while they are trying to have better control of their interest costs. That will insent borrowers to go out and try and refinance their loans.

Bob Coleman: Which will drive premiums down with them because of higher prepayments?

Bob Judge: Right, prepays will go higher and premiums will go down.