Tuesday, August 20, 2013

The Interest Rate Surge and Its Impact on Multifamily via Housing Finance

We all knew the ultra-low mortgage rates seen over the last couple years wouldn’t last forever. Still, the recent rise of a full percentage point over a two-month period left even the steeliest of apartment professionals reaching for their Pepto-Bismol.

From early May to early July, the benchmark 10-year Treasury yield, against which lenders quote most fixed-rate loans, shot up more than 100 basis points (bps), from about 1.6 percent to more than 2.7 percent. Meanwhile, lender spreads—the amount a lender adds to the benchmark to produce a final interest rate—have also widened gradually over the course of the year.

The net result: Fixed-rate quotes were up about 100 bps over the span of 60 days, with the popular 10-year terms typically ranging from the high–4 to the mid–5 percent range, depending on leverage levels and other risk factors.

Read more...The Interest Rate Surge and Its Impact on Multifamily - Interest Rates, Capital Markets, Cmbs, Debt, Government Entities, Mortgages And Banking - Housing Finance:

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