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 Now Below 4.5% on Falling Treasury

After flatlining at 4.5% for over 10 weeks, the 1oyr apartment building investment loan rate we track dropped to 4.375% in the middle of January and has remained there since:

10 year apartment investment loan rate February 2015

All this while the 10 year Treasury (T10) got within 2bp of the 1.66 posted back in May of 2013, causing the spread to widen to the two and a half range from two and a quarter. That in turn is causing the trailing 6 month average to continue its upward curve, now in the 2.25 range.

One other bit of news is that the 15 year am & term loan that we track got to 4.5% about the same time as the 10 year loan only it hasn’t fallen since then. Still if you have a property you want to hold for the long term that will support the higher debt service of the 15 year amortization, 4.5% is a pretty nice rate. Plus if you Continue reading 10 Year Apartment Building Investment Loan Rate Now Below 4.5% on Falling Treasury

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?

Good News on Latest 10yr Treasury, Apartment Building Loan Rates and Spread Chart

In more good news for apartment building investors, both the 10 year Treasury and apartment loan rates have moderated since the Fed’s “non-taper” announcement in mid-September. The spread between the T10 and the 10 year apartment loan rate we track has come in as well. Since 9/16 the Treasury has drifted down from 2.88% to yesterday’s quote of 2.53% while the loan rate has moved from 5.282 down to 4.921, bringing the spread in to 2.381 from 2.402. The average spread for 2013 has also narrowed to 2.573%:

 

10yr Treasury and Apartment Building Loan rates as of October 29 2013. More at www.ashworthpartners.com

Notes about the apartment Continue reading Good News on Latest 10yr Treasury, Apartment Building Loan Rates and Spread Chart

Multifamily Loan Rates Moderate Then Dip, Good For Apartment Building Investors.

10 year apartment building loan rates had been in a range the last few weeks until Ben Bernanke ‘failed to taper’ last Wednesday causing the bellwether 10 Year Treasury to fall about a dozen basis points to today’s quote of 2.72%. This is good news for apartment building investors, home buyers and builders, stock market speculators, just about everyone except savers, retirees and the people running retirement plans. The upside is that loan rates may head lower but the downside is the economy and particularly employment haven’t improved enough to ease off the money printing pedal.

Here’s the latest chart showing the T10, the 10 year fixed apartment rate we track and the spread between the two:

10 year fixed apartment building investment loan rate lower

This week’s quote for a 10 year fixed rate, 30 year amortization apartment loan is 5.131%. (See below for more detail on this loan). The other thing noticeable on the chart is that the spread between the rates has been below the yearly average consistently since the beginning of July. In fact the average spread has fallen to 2.602 from 2.661 over that period. Partly because 4.5% was about as low apartment rates were going to go no matter how far down Treasuries went but also I think that lenders are getting more aggressive, especially in the multifamily sector.

Continue reading Multifamily Loan Rates Moderate Then Dip, Good For Apartment Building Investors.

Apartment Building Loan Rates Rise as 10yr Treasury jumps 31bp in Ten Days

After two weeks of holding at 5.068% the apartment loan rate we track rose to 5.274%, pushed higher by the 10yr Treasury moving up 31 basis points in the last week and a half. The spread between the two remained below the 2013 average of 2.628, coming in at 2.394:

Aparment Building Loan Rates Rise August 20 2013

This means that the monthly payment on a $1,000,000 apartment building investment loan with 30 year amortization would rise from Continue reading Apartment Building Loan Rates Rise as 10yr Treasury jumps 31bp in Ten Days

10yr fixed apartment loan rate remains below 5.1% as 10yr Treasury ranges in 2.6-2.7% area

The rate on the 10yr fixed (30yr amortization) apartment building loan we track stayed in the 5.0-5.1% range for the second week while the spread to the 10yr Treasury remained in the 240 area, still lower than the 2013 average of 264:

Apartment building investment loan vs 10 year Trasury rate

The narrower spread makes sense in light of the July Senior Loan Officer Opinion Survey on Bank Lending that reported loosening lending standards for commercial real estate loans (including apartments) even as loan demand picked up: Continue reading 10yr fixed apartment loan rate remains below 5.1% as 10yr Treasury ranges in 2.6-2.7% area