Are Rates Dropping in 2024?
A 2022 Technohull T9 listed for sale at $248,000. View listing.
Boat lending looks to trend up in 2024, reducing our recent enjoyment of buyer leverage.
The United States Federal Reserve held rates steady on Wednesday—making three consecutive rate holds—in preparation for three rate cuts in 2024. With rates ready to fall, how may that affect the boat market?
Increased Demand and Reduction of Buyer Leverage
With loans looking more affordable, we may see an increase in demand, and therefore, a reduction of the leverage that buyers have enjoy over the past few quarters. Buyers could use a little more time as the advantaged party after years of Covid buying at MSRP (new boats) and list price (used boats), and they’ll likely have it, considering a rate hold or decrease will still leave rates significantly higher than we saw in 2020/2021. That said, the yacht sales market could find its bottom sometime next year. If you’re buying cash, now may be the time to lock in some value.
Thinning of the Selection We’ve Been Enjoying
For the first time years selection has been great! If you’re targeting a specific model, you are probably seeing a few options on the market, allowing you to leverage the options and get some additional value from your seller(s). With rates increasing, that selection may tip against buyers in 2024, leaving you without optionality. If you’ve got a few options to choose from but only one or two have the options you prefer, now’s the time to guarantee you get the engines/color/condition/layout you want.
The Fun of Negotiation
Everyone wants a deal, and we’ve been getting them recently. Whether its 5%, 10%, 15% or more, hard negotiation hasn’t fallen on deaf ears in 2023. That fun might be limited soon, so if you like to make sure there’s no meat left on the bone for the person across the negotiating table, now’s the time to eat.
Looking to Buy? Quick Tips from an Industry Veteran
A market update from Noelle Norvell of Luxury Financial Group.
“Prime has risen 3% from 5.5% to 8.5% over the last 18 months while the fed is trying to curb inflation. The good news is that yacht loans are still attractive! Yacht loans can be comparable to mortgage rates for loans over $750,000 can be at 7.5% fixed for 20 years.”
Maximizing your depreciation and security on a yacht loan.
If your new yacht has a berth, head and a galley, you can lower your interest expense. And don’t forget, you don’t have to take a loan against your securities, the lender’s security is only on the yacht itself.
