Instant volatility prevails ignited by any news outbreak such as the MiddleEast, Ebola and Russia, rattling Treasurys by 10 to 20 basis points in within a day.
On the other side of the equation, mortgage spreads keep declining from their historical norms. Currently spreads are about ten to twenty basis points narrower than the averages for the past three decades.
property fundamentals, generating a very narrow mortgage pricing band across
multiple asset classes. For instance, equally-leveraged office properties
trade only about five basis points wider than multifamily assets; Industrial
and retail rates are nearly equally priced. Only a month ago, the rate
premiums between various property types varied as much as ten basis points.
Quickly tightening mortgage spreads occasionally create unique yield
inversions, as many investors are caught off guard. In some cases, the
mezzanine and preferred equity tranches actually priced lower than the
higher-risk components of senior debt. Freshly-priced mezz/pref equity
funds were blended with older, higher-priced senior debt lining up for
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 daily rate updates.
For a complete copy of the company’s news release, please contact:
The Real Estate Capital Institute(r)
3517 West Arthington Street
Chicago, Illinois USA 60624
Contact: Jeanne Peck, Executive Director