Treasury rates are up but…

10 year Treasury rates vs. apartment builiding investment loan rates thru July 2015
Click on image for full size

For this month’s post on apartment building investment loan rates and the key 10yr Treasury (T10) we’re looking at the longer trend back to the beginning of 2013. The news has been full of talk about rising interest rates but looking at the chart above we can see that while the T10 is up off its recent low of 1.68% in the end of January it’s still more than 50 basis points below the highs it hit in September and December 2013 (2.98% and 3.04% respectively).

In turn the 10 year apartment loan we track has been treading water around the 4.3% mark for the last nine months and essentially it’s back to where it was in early 2013 before the Continue reading Treasury rates are up but…

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%.

10yr #Multifamily Investment Loan Rate Comes Back to Life, Rises 7.9 Basis Points

The 10 year apartment building investment loan rate we track moved up to 4.454% from 4.375% yesterday after flatlining at the old rate since the middle of January:

10 year treasury vs. apartment building investment loan rate May 2015

Even so it is still below what we used to think of as the 4.5% floor for this rate. Meanwhile the ULI rate has been tracking the 10yr Treasury, rising from 3.37% April 20th to 3.76% yesterday, a climb of almost 40 basis points.

Is this the beginning of the long anticipated (The 3rd or 4th year in a row that everyone’s known rates were going to rise) rate hikes? It makes sense that the Fed would like them to get up off the floor if for no other reason that they would have room to lower them again when they needed to. But is now the time to do that when China, Europe and the rest of the world are slowing down?

While the US economy has been Continue reading 10yr #Multifamily Investment Loan Rate Comes Back to Life, Rises 7.9 Basis Points

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

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?

10yr Apartment Investment Loan Rate Steady While ULI <60LTV Rate Drifts Lower

The apartment building loan rate we track remains in the 4.6-4.7% range where it’s been since the middle of July. Meanwhile the ULI <60% LTV loan rate has fallen 10 basis points over the same period with its spread to the 10 year Treasury coming in from 1.32% to 1.27%. That’s a very slim margin indicating a very competitive market for those loans. Typically the 10yr apartment loan rate loosely tracks the ULI rate with a lag so we’re hoping to see the rate come in a little more for deals closing in the next few months.

While everyone seems to ‘know’ that rates must be going up influential economist Anatole Kaletsky (the Kal in GaveKal Research) makes a pretty convincing argument that the central bankers in the US, UK and Europe will be following their contemporaries over at the Bank of Japan, keeping rates ‘lower for longer’ in a piece out this week from Evergreen/GaveKal. Note that registration is required but they will only send you the weekly ‘Virtual Advisor’.

Chart of 10 year apartment building investment loan rates

About the spread between the T10 and the apartment building rate we track, Continue reading 10yr Apartment Investment Loan Rate Steady While ULI <60LTV Rate Drifts Lower

Apartment Investment Loan Rates Remain in 4.6-4.7% Range As Spread To Treasury 10yr Holds

The apartment building loan rate we track came in today at 4.765% (see below for loan details), making it 22 straight weeks below the five percent mark. The spread to the 10 year Treasury (T10) also remained in the 2.1 and change range where it’s been since the beginning of March, indicating that the very competitive market for multifamily loans continues on.

For the gold plated ULI less than 60% LTV loan the spread dropped into the 1.2s from the 1.3 range where it had been holding since late February, taking the implied rate for these core institutional apartment loans down to 3.77%.

10 Year Treasury versus Apartment Building Investment Loan Rate

Speaking of the spread between the T10 and the Continue reading Apartment Investment Loan Rates Remain in 4.6-4.7% Range As Spread To Treasury 10yr Holds

Apartment Building Investment Loan Rate Trends Lower as 10yr Treasury and Spread Fall.

The apartment building investment loan rate we track continued to trend downward as both the 10yr Treasury (T10) and the spread between the two came in during April. Today’s new rate on the loan is 4.733%, a 212 basis point spread over the T10 which was in the  2.61% area today. The six month moving average spread continues to fall suggesting that lenders are more confident and/or aggressive but the spread itself is above the March 17 low of 209bp.

This month we add a new rate which the ULI (Urban Land Institute) reports on from the Trepp survey. According to the ULI the Trepp rate is what large institutional borrowers could expect to pay on a 10 year fixed rate, less than 60% LTV loan for a “crème de la crème” core apartment property located in a gateway market. We track this rate as a barometer of what the largest lenders are offering their best customers on the most secure loans for any advanced warning about future rate and spread changes.  See the ULI<60LTV Rate on the chart below (in gold). Note that the spread we chart is between 10yr loan we track (in orange) and the T10 (in blue):

Apartment Building Investment Loan Rate versus Ten Year Treasury Rate May 2014

Speaking of the spread between the T10 and the ten year apartment loan rate, now that Continue reading Apartment Building Investment Loan Rate Trends Lower as 10yr Treasury and Spread Fall.

Apartment Loan Rate Stays Below 5% For 10th Week

The apartment investment loan we tract (see below for details) clocked in at 4.861% this week making it the 10th week in a row below 5%. Meanwhile the spread between it and the benchmark 10 year Treasury (T10) held in the 210 -220 basis point range over the last six weeks.  The T10 itself had been in the 2.7% range over the last month but dipped to 2.65% this week:

Apartment Building Investment Loan Rate vs Ten Year Treasury Rate April 2014

Speaking of the spread between the T10 and the ten year apartment loan rate, now that Continue reading Apartment Loan Rate Stays Below 5% For 10th Week