Chicago, IL, July 2, 2012 - Treasury behavior continues a sideways course with the benchmark 10- year note drifting by 15 basis points during the past 30 days.
The Fed's Operation Twist based upon selling shorter maturity bonds and purchasing longer bonds in full swing as part of the effort to stimulate the economy.
Interest rate policies are mainly governed by the Eurocrisis and bank rating downgrades as well as China's interest rate cut announcements. All arrows point to reviving slowing economies throughout the world.
Housing starts provide some positive news on the real estate development front with three months of rising construction permits and slight pricing
gains; the residential real estate market is starting to recover despite the overall US economic slowdown.
On the other end of the spectrum, while commercial-property sales volume levels are brisk, some firms report lower figures than a year ago, as buyers are cautious and sellers unload more assets into reasonably liquid markets.
Additionally, buyers hunt for values outside core markets, hoping to capture more reasonable yields than in the mid-single-digits.
Since high-quality multifamily assets remain elusive at affordable price levels, new construction multifamily is still "hot".
Developers target younger renters seeking Class A quality living, rather than homeownership. The trend towards smaller units with significant amenities remains the
target project profile.
Not much news to report for mortgage rates. In the past month, treasury benchmarks and mortgage spreads stayed within a very tight range. The 5 and 10-year notes moved less than 20 basis points, generally trending downward.
In comparison, overall mortgage rates are nearly 1.5% lower than a year ago. Some life insurance companies are not reducing their rates as the treasuries lower; rather some are imposing floors of 4%, which is still an attractive long term interest rate.
The Real Estate Capital Institute's Jeanne Peck (top right photo) observes, "Everything in the debt markets points to a 'wait-and-see' mentality for improving economic conditions. Let the moderate times roll! No reason to panic about [mortgage] rates in the near future."
The Real Estate Capital Institute(r) is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly rate updates.
Contact:
The Real Estate Capital Institute(r)
3517 West Arthington Street
Chicago, Illinois USA 60624
Contact: Jeanne Peck, Executive Director
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