Twenty years ago, private money or hard money interest rates were well into the 35% range–the same rates that, these days, only credit card companies have been able to get away with.  Well, until now.

Even with the credit crunch, the highest interest rates in hard money have typically loomed between 16 and 25 percent for the last year and a half.

But it seems that something good is happening in private money. The trend of interest rates in private money is heading downward. Even within the last few months, I’ve seen rates go down significantly.

For example, take a commercial building in Philadelphia.  Certainly not the hottest market for private money lenders.  And, when a building needs additional construction monies, its even harder to find competitive interest rates.

A few months ago, I queried this loan to all of my commercial hard money lenders. All but one decided to pass.  The lender that did issue a terms sheet, quoted the borrower at 18% interest and 20 points. Ouch!

The good ending to the Philadelphia property story is, I was recently able to get a terms sheet for 11% and 8 points. Even three months ago, these terms were nearly impossible to get for a loan request with these characteristics.

So, I’m optimistic about private money interest rates starting to trend downward. Any thoughts? Please leave your comments or thoughts below.