#Multifamily Loan Rates Find New Lower Floor

Apartment Building Investment Loan sets lower floor for rate.
Click on image for full size.

Both the 10yr and 15yr apartment building investment loan rates we track fell to lows not seen but for just one week last year and they’ve remained there for five weeks. The 10yr rate dropped 13 basis points to 4.25% and has stayed there since Sept. 14. Likewise the 15yr loan (see below for details on the loans we track) also fell 13bp to 4.375% where it has remained from the middle of September on.

Outside of that one single week last year when Continue reading #Multifamily Loan Rates Find New Lower Floor

Apartment & CRE Lending Today- great charts from MPFResearch

Apartment Building Investment and Commercial Real Estate Lending Today
Click on image for full size.

Great set of charts on apartment building investment loans vs. CRE and development lending. If recency bias has you thinking bubble check in with the demographics which show millennials are the largest population group in the country and 30% of them are still in their parents’ basement. As they unbundle they’ll be looking for apartments but they’ll be competing with a lot of empty nest boomers too. Demographics is destiny.

Apartment Financing Hits An Air Pocket in Latest NMHC Survey

Apartment Building Investment Lending Conditions July 2015

The National Multifamily Housing Council’s NMHC Quarterly Survey is out now and three of the four categories held fairly steady but the availability of  debt financing dropped twenty five points from sixty to thirty five. A reading below fifty indicates worsening conditions and the report on the survey said that with Continue reading Apartment Financing Hits An Air Pocket in Latest NMHC Survey

Aided by falling spread, apartment loan rate fights its way back below 4.5%.

10 year apartment building investment loan rates June 2015
Click on image for full size.

The apartment building investment loan rate we track moved down from last week’s 4.532% to just under 4.5 at 4.489% aided by the spread to the 10yr Treasury (T10) compressing to 2.142 versus the week earlier 2.185. Meanwhile the T10 and the ULI rate seem determined to raise rates even if the Fed doesn’t act. And Greece is set to Continue reading Aided by falling spread, apartment loan rate fights its way back below 4.5%.

Apartment Building Investment Loan Rate Continues Its Steady State

The apartment building investment loan rate we track remains at 4.375% where it landed back in the middle of January. Other than a brief one-week visit to 3.396% back in March which wasn’t even enough to move the chart line it’s been steady as she goes:

Apartment Building Investment Loan Rate April 2015
Click on image for full size

With the 10year Treasury dipping below 2% the spread has been widening as 4.375% seems to be the new 4.5%. Once again people are expecting rates to go up later in the year (is this the third or fourth year for that prediction?) but the Fed and the Government have been following the Japanese model step for step and their Ushinawareta Jūnen (Lost Decade) is old enough to drink and will be graduating college soon. I’m not sure why anyone thinks this time will be different just because we’re talking dollars instead of Yen. But there is this:

That men do not learn very much from the lessons of history is the most important of all lessons that history has to teach. – Aldous Huxley

In other news Susan Persin, Senior Director of Research at Trepp has Continue reading Apartment Building Investment Loan Rate Continues Its Steady State

10 Year Apartment Building Investment Loan Rate Drops Another 6 Basis Points Today

The 10 year fixed rate apartment building investment loan we track fell 6 basis points (bp) to 4.369% today. (See loan details below):

10 year Treasury vs. Apartment Building Investment Loan Rate
Click on image for full size

That drop doesn’t show up on the chart very well but it’s the first change in the rate since the middle of January when it had been flatlining at 4.5% since the end of November. Meanwhile the T10 (10yr. Treasury) had been working its way higher since hitting 1.68% in the end of January which in turn has been reducing the spread between the two rates from the 2.5% range down below 2.25% and coming in to 2.169 today. I expect the Continue reading 10 Year Apartment Building Investment Loan Rate Drops Another 6 Basis Points Today

Spreads Widen on 10 Year Apartment Investment Loan Rate, Trend or Seasonal?

The 10 year apartment building investment loan rate we track has returned to its old boundary of four and a half percent despite Treasuries in the two and teens again at the end of November. On the 28th the T10 was within 1pb of the mid-October Massacre low of 2.17. Something had to give for the loan rate to get back to the 4.5% range and it was the spread which jumped above 2.25 last week for the first time since February:

Apartment Building Investment Loan Rates vs Treasuries Yield Premium

The spread has gone from the Massacre low of 1.93 to 2.28, a 35bp climb in only seven weeks. Meanwhile the ULI <60%LTV last week was 3bps below its mid-October low, tracking the Treasury with a consistent spread of 1.38 in four of the last five weeks.

It’s interesting that the spread plunged Continue reading Spreads Widen on 10 Year Apartment Investment Loan Rate, Trend or Seasonal?

QE is the most destructive policy for housing in world history. – Dr. Peter Linneman Good for apartments?

Was on NAI Global’s call with Peter Linneman, their chief economist who had some very interesting things to say for apartment building and commercial real estate investors yesterday. Note he’s an actual real estate guy as well as a Wharton professor and I would have lobbied for a better job title at NAI with his background.

First is about the bombshell quote from above. Linneman said there are many studies about home buying that show the down payment is the issue not the mortgage payment and disputes the whole people buy a monthly payment thing.

If I don’t have the downpayment it doesn’t matter what the interest rate is.

Young people are having a very hard time saving for a downpayment at zero percent interest and their parents and grandparents can’t afford to help at zero percent interest on their savings either.  Linneman summed it up by putting it in a golfing context: It’s not the green fees it’s the club membership that make it expensive. Japan is the poster child for this bad policy, they’ve been doing QE for twenty five years and it’s done nothing to fix their problems.

The most interesting thing from a multifamily perspective was that he believes we’re at the beginning of the capital cycle for CRE including apartments:

apartment building investment loans a beginning of long up cycle

He also believes that cap rates will Continue reading QE is the most destructive policy for housing in world history. – Dr. Peter Linneman Good for apartments?

The Great Columbus Day Apartment Loan Rate Massacre and other interesting interest rate stories

What a month it was for apartment building investment loan rates. The week we were all wondering How is Columbus Day Still a Thing? The 10yr rate we track fell to a low of 4.139% with the spread between it and the 10yr Treasury (T10) breaking below 2% to 1.929 (See below for details on both). I have to hand it to the ULI, they’re good. They had just said:

If you are waiting for someone to ring a bell and say that we have reached the bottom, consider the bell rung. Think twice about ignoring these record-low levels.

It only lasted a week but the rate stayed below 4.5% through the end of the month:

Apartment building investment loan rates November 7, 20`4

As you can see, that one week the spread was also well below its six month average while the T10 got as low as 2.15%, territory it hadn’t seen since the middle of June 2013. We finally got some updated numbers on the ULI rate which would have been nice to have in real time as it was stepping down consistently for six weeks starting in the middle of September, foreshadowing the Continue reading The Great Columbus Day Apartment Loan Rate Massacre and other interesting interest rate stories

Apartment Building 10yr Loan Rates: Is 4.5% The Lower Limit?

The apartment building investment loan rate we track was down to the high 4.5s the last couple weeks of August and clocked in today at 4.603%. The spread between it and the 10 year Treasury has been trending above the 120 day average for five weeks and I’ll have more on that below. The ULI <60LTV rate has been noisy and almost looks like it’s fighting to continue lower:

10 Year Treasury versus Apartment Building Loan Rates Sept 8 2014
Click for full size image.

While the ULI rate works its way south, it seems like 4.5% is the hard boundary for the Continue reading Apartment Building 10yr Loan Rates: Is 4.5% The Lower Limit?