The old proverb may be that "a rising tide raises all ships", but in today’s rising tide of interest rates, real estate investors who fail to have an appropriate hedge program in place risk being overrun by the tide. The Federal Reserve has signaled its intention to continue the measured pace of short-term interest rate growth that has occurred over the past 15 months. During that period, the gap between the federal funds rate (the Fed’s benchmark short-term interest rate) and the Treasury’s 10-year note (a reference rate for many mortgage lenders) has narrowed to about one percent. Although many factors influence long-term rates, continuing increases in short-term rates make material increases in long-term rates more likely.

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