Speaking of Rates...
Today’s lending landscape looks a lot different than it did 12 months ago!
After enjoying nearly 15 years of lower rates, we have seen the Federal Reserve increase the Fed Funds Effective Rate, which is the rate at which banks lend to each other, from 0.05% as of April 2020 to 5.25% today.
How can we explain rising rates to our customers? The Federal Reserve’s aggressive course of action is an attempt to counter the inflationary pressures created by the money supply boost to households during the COVID-19 slowdown. While these moves are showing signs of success in curbing inflation, the rapidity of this interest rate increase has caused some banks to fall victim to capital shortages and liquidity crunches (Signature Bank, Silicon Valley Bank, and most recently First Republic Bank).
The reverberations of these sudden and sizable bank failures, as well as the prospect for additional regulation, have led their peers to tighten their lending standards, making credit more expensive and harder to come by for customers. We expect that bank activity in the equipment finance space will continue to decrease going forward.
Amur, as one of the largest non-bank equipment finance companies, is well prepared for the new interest rate environment with one of the strongest capital positions in the industry. While no one is immune from the financial winds in which we all operate, we are excited to be exceptionally well-positioned to continue to serve you as your trusted financial partner through this cycle and the cycles to follow.
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