Wednesday, October 5, 2016

Real Estate Capital Institute Finds Mortgage Markets Behaving Like Musical Chairs With Liitle Rate Movement

Jeanne Peck
Chicago, IL -- Chicago-based Real Estate Capital Institute reports "The Song Remains the Same" is the
musical theme for mortgage markets during this heated pre-election season.

Markets behave more like musical chairs, with little movement in rates.  As
the economy rises towards full employment, few politicians and Fed
policymakers fear making any serious economic changes for now.  Even with
inflation concerns, expect the Fed to respond with rate hikes gradual and
most likely next year.

Borrowers are not concerned about an imminent, material increase in long
term rates but they ARE motivated to refinance off their long term
financings locked in from 2005-2007 so some are still looking to close this
year to achieve significant interest rate savings; at the very least they
are closely tracking the dates of their "prepay at par" clauses in the
documents.  They are mixed with preferences between floating rate and fixed
rate structures.

Otherwise, not much excitement, other than mortgage money pricing remains
low. With the exception of a mid-month spike, benchmark treasuries moved
down modestly, settling at about the same levels as the beginning of the
month. Longer-term mortgages range stay in the 3%+ range, while shorter term
rates start in the mid-2% range - a relatively tight yield curve between
various maturities.  Other trends include:

*    Renewed conduit investor activity helps the industry regain ground -
AAA credit components priced in the low 100 bps range over treasuries.

*    Rate "tweaking" not as important with many borrowers given the
already low levels.  More emphasis on other underwriting variables
(prepayment, leverage, debt coverage, etc.)

*    Maximum leverage loans still available from agencies, and more life
insurance companies team up with mezzanine providers for higher proceeds.

*    FHA/HUD multifamily funding programs continue providing higher
leverage construction/perm debt, even as banks pull back from maximum loan
amounts within this sector.

Ms. Jeanne Peck, director of The Real Estate Capital Institute(r), advises,
"Markets are on a steady course for the remainder of the year, irrespective
of who takes control of the White House.  Still a great time to borrower

For a complete copy of the company’s news release, please contact:

 Jeanne Peck, Executive Director

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