In the midst of difficult economic times the specific segment of church finance is in the midst of some uncharted economic ground. The time of relatively “easy money” for church construction projects disappeared a few years ago and we are just starting to emerge into a more favorable environment. Churches have learned to be wiser with their resources. Funding requirements are beginning to slightly loosen.
In the past few years, record low interest rates and relatively low inflation have provided the church with the luxury of options in regards to project timing. Currently, a church can borrow a little extra at a very low interest rate and move forward with their project right away, or, they could choose to hold while raising capital funds before beginning a project. Both options offer little financial risk to the church in such a favorable economic environment.
What does the future hold for churches considering new ministry tools?
Recently, I attended an economic forecast offered by a local bank that has funded several church projects over the years. Dr. Edmond J. Seifried delivered the economic forecast. Dr. Seifried is Professor Emeritus of Economics and Business at Lafayette College in Easton, Pennsylvania. He serves as Executive Consultant and Chief Economist for the Sheshunoff CEO Affiliation Program and is also a partner in Seifried & Brew LLC, a community bank consulting firm.
Dr. Seifried said something that caught my attention right away. At the Federal Reserve meetings the board discusses interest rates and guidelines for economic indicators that will signal when the FED will raise interest rates. They took an anonymous survey at their meeting asking, “When do you think we will raise rates and by how much?” A handful of the board thought they would raise rates in 2014 by a percent or two. 100% of the board thought they would raise rates sometime in 2015 by three to four percent – essentially doubling the cost of funding!
This tells us the time of favorable funding options will soon be disappearing!
If there is a project in your near future this may be the time to turn up the heat and move ahead. Research, visioning, planning, stewardship campaigns, drawings and permits all need to take place before a loan can be locked in and secured, and all of these take time. We can help!
Wise planning now will enable you to take advantage of this short economic window, and be the best steward of Kingdom resources!