With the election over the news turns to how Washington will resolve the debt ceiling, the Bush era tax cuts, our looming federal debt and the draconian sword of the Sequester, which  looms to potentially cut fully a third from the Federal Budget, including Defense.

This is high drama, as ideology is tested against the realities of needing more money.  A new Congress, perhaps even more divided than the last one, will be sworn in, and while there is talk of a down payment, say $80 Billion on the debt in exchange for a 6 month delay in resolving the issues, posturing seems to be the initial response in what will prove to be an ugly process.

So what does this offer the Multifamily investor trying to decide on what to do about refinancing?

In the last two weeks, we have seen interest rates increase 30-35 basis points as GNMA investors start to demand a return for their money, at least equivalent to the risk these market forces are exerting.  While part of this might be seasonal, it is interesting that world events like the Middle East which typically promote a flight to quality (and thus lowering rates), have not reduced rates at this time.  Perhaps the uncertainty of Washington is having an effect greater than Israeli-Palestinian or Iranian discord.

Investors like clarity and there seems to be none in D.C.  While it would seem some type of agreement will be reached eventually, the nature of that agreement seems still up in the air, causing investors to demand a higher return, if they are going to play at all.

My prediction:  rates will go up, go down or stay the same.  The key is to be in a position to act quickly no matter what happens if 2013 is the year for you to act.  Having your loan processed and ready to lock your rate could prove to be a great strategy, no matter which way rates break.