Seize the Day via AFT Online Article

A YEAR AGO, nobody thought they’d ever see it again. A year later, everybody’s wondering how long it can last.

The permanent-debt market has featured some of the lowest interest rates in history over the past 18 months. Long-term fixed rates in the low–4 percent range have helped push cap rates down to pre-recession lows in some markets, while driving a wave of refinancing.

The yield on the 10-year Treasury entered uncharted waters in 2011, dipping to 1.67 percent in September, and hovering around 2 percent well into December. Not even a downgrade of our nation’s credit rating could stop the benchmark’s downward march.

Fannie Mae and Freddie Mac again captured about two-thirds of the market for permanent debt in 2011. Life insurance companies grew more active, the banking sector got its appetite back, and there was even a brief window in the spring when it seemed like commercial mortgage-backed securities (CMBS) had come back for good.

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