PeerStreet short-term loans (6-24 months) should not be as adversely impacted by a rise in interest rates as loans of longer duration. As interest rates rise, new loans also get originated at higher rates. Since PeerStreet’s loans have short terms, investors are able to recycle capital more efficiently and capture higher market rates much sooner. Some of our investors have constructed short-term “ladders” to invest in loans across the maturity/term spectrum, allowing them to (1) better capture market investment yields in a rising rate environment and (2) maintain a constant stream of liquidity. The image below depicts how you can construct such portfolios and increase liquidity in a rising interest rate environment, on a quarterly basis through laddering:
