RECORD-HIGH BORROWING AGAINST INCOME IN Q1 2013
» BORROWERS RAISE $11.26 IN DEBT FOR EVERY DOLLAR IN PROPERTY INCOME
» UNDERWRITING SHOWS NO DEFINITIVE SIGNS OF ADJUSTMENT TO SLOWER RENT GROWTH
» LOW-COST DEBT AND LENDER COMPETITION EXERTING PRESSURE ON ASSET PRICES
The cost of financing apartment acquisitions and refinancing maturing apartment loans held to record-lows in the first quarter, exerting upward pressure on asset values. Across new mortgages made by banks, life companies, CMBS conduit originators, and through the sector-dominant agencies, average interest rates for fixed-rate financing generally ranged between 3 and 4 percent, depending on asset quality and location. For long-term amortizing fixed-rate debt, the average interest rate on new originations was 4.0 percent. Spreads narrowed during the quarter, reflecting a marginal increase in the underlying Treasury yield.
Read more...Q1 2013 Apartment Financing Trends | Chandan Economics
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