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| John Oharenko |
Chicago,
IL – The Real Estate Capital Institute (RECI) reports the coronavirus conquers
all capital market discussions, as the 10-year treasury dips to the lowest
point in history, at 1.15%.
In
contrast to 1981, when rates peaked to over 15%, this milestone rate supports
the longest bull market in history for government bonds.
For
further comparison, treasuries peaked at 8.89% (September 1990), and dipped to
1.48% (July 2016), averaging about 4.5%. Since 2012, treasuries
regularly hovered in the 2%-and-below range.
Until
more certainty returns to the marketplace, many lenders institute rate floors
by widening spreads, with 3% serving as a common minimum rate.
However,
with record supplies of capital entering the real estate sector, intense
competition for funding cash-flowing properties prevents floors from taking
hold. As a result, borrowers continue taking advantage of
historically unprecedented low mortgage rates, as lenders scramble in search of
paltry yields.
Despite
low rates, the commercial real estate industry enjoys healthy performance in
most markets as supply and demand fundamentals remain in check due to overall
underwriting discipline and rising new-construction costs.
Under
such conditions, property pricing also remains at historically high levels.
According
to John Oharenko, director of the Real Estate Capital Institute, “Based
on extremely low rates, markets sail into unchartered waters. Yet
the waters seem calm with little signs of stormy conditions, at least for now.”
CONTACT:
John Oharenko
Executive Director
Real Estate Capital Institute
john.oharenko@reci.com
The
Real Estate Capital Institute® 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.
The Real Estate Capital Institute®
Chicago,
Illinois USA 60622
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