Maximum Capacity

Short-term rates, which are typically tied to LIBOR, have already gone up as the Fed has raised rates. That typically affects ongoing lines of credit with floating interest rates. So far, long-term rates have stayed relatively low, but banks may be forced to raise them as the spread tightens. “Rates may have a tendency to trickle up as market rates go up, but  I think that will occur across the board, and won’t prevent area banks from continuing aggressive competition,” Falb says.

Even so, he says, “now is a very good time for a commercial borrower to be in the market, looking for financing.” Market conditions will likely be favorable in 2006, he says, but “after that, it’s hard to tell what will happen.”

“No trend continues unabated,” Wall agrees. Borrowers, take note.