Business&RealEstate Bank failures’ impact on lending

I am extremely concerned about the failure of SVB, Signature and now Credit Suisse. Who will be next? There will be smaller banks that are stressed fnancially with the much higher rates, that had investments in Bitcoin and other digital currencies and do not have the money to back them up. OMG, we are in for a very tumultuous and scary time and this will have a major impact on lending and real estate purchases.

What I have been watching and waiting for are “what makes sense” opportunities. They are coming and will be fooding the market over the next six to 36 months. Fed Chairman Jerome Powell, who has increased rates nine times in the past 16 months, may possibly add another 1/4 to 1/2 point hike this week. Although the infation rate has come down to supposedly 6.5% from the 8%-plus high last June, I believe he will have to continue raising rates to quell our unrelenting infation in order to get it down to his 2% goal. I am not sure how many months or even years that it will take to succeed in achieving his objective.

Looking back, the Fed through “Quantitive Easing” made available over $6 trillion of digital currency to the banks and consumers, but actually only printed approximately $3 trillion — a move 99% of the population probably didn’t know about. The middle class, whatever is left of it, is in huge trouble. Credit card debt was $972 billion in January 2023, the most ever on record, because everyone who was receiving PPP, EIDL, and unemployment insurance is now out of dollars and they are using their plastic to survive. That is a sad and truly scary position to be in.

Who can predict when this catastrophic situation we are in will end? It’s obvious infation is still out of control, but raising rates further will only exacerbate our fragile, yes fragile economy as layofs will continue to shed excess employees as consumers continue to slow their spending, especially on discretionary purchases.

Layofs will be the mainstay of our market as things continue the way they are. I wouldn’t be surprised if we see more food pantries spring up and more families and individuals need assistance because of the lack of available money to buy food. I already see this in Long Island at the 501C not for proft “The Interfaith Nutritional Network” Food Pantry on 100 Madison Ave. out in Hempstead, NY. They are feeding in excess of 500 families and individuals twice a day and it will be getting much worse!

Purchasing any homes or any other type of real estate with fnancing will be that much more challenging and difcult as it has and will continue for many to be too costly to aford the monthly expense.

However, that will depend on one’s income as higher-income families and individuals will most likely still be better of buying as a comparison with renting, depending on the cost. It will still be more advantageous due to the tax deductions, the potential of using part of your home as an ofce, as many have been doing and the stability of being your own landlord and having a fxed-lease (a mortgage) for 30 years.

Taking a seven-year fxed ARM (adjustable rate mortgage) for now might be the best approach and rates could come down within that time. At least you won’t be throwing out your money on someone else’s property, paying his/her mortgage, providing them tax and expense deductions, reducing your wealth and giving it away each and every month as well as the security of knowing you are now in control as the landlord (homeowner) and can determine if and when you want to move.

Cash purchasers are and will be in better positions to make purchases whether it is a home or a investment property ecause “cash just might be king” in those situations when motivated sellers would rather take a sure transaction than worry about fnancing with an appraisal that may not be what your agreed and accepted price is. The buyer can now come back and renegotiate the price if the sellers are not going to be reasonable. I would impress upon sellers not to lose a qualifed buyer and think outside the box to make the sale work.

As more banks potentially fail, then the existing banks will become even more restrictive with their lending requirements. This, in turn, will create a tougher environment for fnancing for those with mediocre credit, insufcient income and debt/income ratios or those who don’t want to pay the higher rates but are qualifed. Some sellers who really need or want to sell should consider providing either a short or longer-term mortgage to create a greater demand for their home or even investment property.

Most important for the seller is if there are substantial capital gains then providing fnancing will stretch out their capital gain taxes over many years and you will receive a great interest rate, than any bank, as you now become the bank.

The future is uncertain and the Fed is between a “rock and a hard place.” We are already seeing bailouts for depositors, although they are candy coating it by saying “shoring up the banks and protecting consumer’s deposits (but not investors in those banks). It is very obvious that taxpayers will be footing the bill in the future and I am somewhat convinced at this point in time that there will be a recession. How bad it will be we’ll fnd out this year or next.

The links below are clickable online to donate (if you are a subscriber or become one, go to: Subscription Ofers to provide to a friend or business associate) to go online to read my 350+ archived columns: Philip A Raices

Donate to Turkey Relief

Continue to Donate to the Ukrainian Crisis and save a life or the Donate to The Ukranian Relief Fund InternationalOrganizationforMigration a501(c)3Corporation OR: Donate to Ukranian Project

What is Hypertext Transfer Protocol Secure (HTTPS)?

Have you noticed that a website address starts with the letters and symbols of http:// or https://? What is the difference and why should you care? HTTPS secures communication and data transmission between a user’s web browser and a website. HTTPS is the newer, more secure version of HTTP.

HTTPS helps to secure websites that send or receive sensitive data. Simply put, any website that requires login credentials or involves financial transactions should use HTTPS to ensure the security of users, transactions and data. This includes personal or business information exchanged by online banking services, online retailers and healthcare providers.

A malicious actor can easily impersonate, modify or monitor an HTTP connection. HTTPS protects against these vulnerabilities. As a result, it ensures that no one can tamper with these transactions, securing users’ privacy and preventing sensitive information from falling into the wrong hands.

Small and medium-sized business managers should be mindful to check for the secure HTTPS when accessing websites for banking, shopping online, and SAAS (software-as-a-service) programs. We highly recommend coaching all employees to look for this, as well. Human error is behind the majority of IT breaches and is avoidable with proper training and reinforcement. Contact Sandwire Technology Group for information on affordable cyber security training for your company.