Interest Rates for Popular FHA-Insured HUD Loans Move Lower as Economic Uncertainties Drive Government Bond Yields Down

CHICAGO, IL--The recent plunge in the 10-year U.S. Treasury bond rate means senior housing/healthcare borrowers will be getting an even more attractive interest rate on their HUD Lean mortgage loans in the weeks ahead, funding expert Jeffrey A. Davis (top right photo)  observes.

Davis is Chairman of Cambridge Realty Capital Companies, one of the nation’s leading senior housing/healthcare lenders, with more than $3 billion in closed transactions since the mid-1990s. The company has been ranked among the top FHA-insured HUD lenders for more than a decade.

According to Davis, interest rates for HUD 232 loans tend to mirror developments in the government bond market, in May, there was a significant 50 basis point drop in 10-year Treasury yields, from a high of 3.76 percent in April to 3.25 percent a month later.

Bond yields nudged up slightly in early June but remain well below highs for the current calendar year.

“It’s not uncommon for volatility in the equities market to drive bond yields lower. The economic crisis in Europe, a disappointing job report and the calamitous oil spill in the Gulf all have investors on edge.

“Some worry that the U.S. economy could be headed for a double-dip recession, while others, including Fed Chairman Ben Bernanke (lower right photo) , see a tepid recovery continuing but with stubbornly high unemployment. Whichever scenario unfolds, it’s unlikely that Treasury bond yields will be moving dramatically higher anytime soon,” he noted.

Davis said the Cambridge staff is reminding senior housing/healthcare clients that rates for refinancing with the popular new HUD Lean product are probably as low as they’re likely to get in the current cycle.

Cambridge is the creator of The Signature Experience™, a four-step process designed to transform the traditional lender/borrower relationship and identify “ideal” capital solutions for worthy projects. The company has a national origination office in Los Angeles, and numerous correspondent and brokerage relationships nationwide.

Cambridge Says Loan Origination Requests for May Match Last Year's Total but Year-to-Date Numbers Continue to Trail 2009

Although news on the economic front was less than encouraging, Cambridge Realty Capital Companies reports the company processed 25 loan origination requests totaling $210.9 million in May.

Chairman Jeffrey A. Davis said the loan request total precisely matched the number of requests processed during the same month last year, but the dollar volume total was slightly higher than the $202.7 million reported for May, 2009.

For the year-to-date, origination totals for the five-month period were down 16 percent, from 137 in 2009 to 115 a year later. And dollar volume was down a comparable amount, from $1.8 billion in 2009 to $1.5 billion in 2010.

Davis points out that lenders close a relatively small percentage of loan requests received. But he believes it’s useful to track this information as an indication of market directions.

“When we look at 12 month tracking data the picture that emerges shows we’re running about 10 percent behind last year’s totals for the comparable period. Underwriting criteria has tightened and conventional lenders aren’t terribly active.

“However, the good news is that borrowers are finding interest rates for popular HUD LEAN loans are at exceptionally attractive levels,” he noted.

Cambridge is the creator of The Signature Experience™, a four-step process designed to transform the traditional lender/borrower relationship and identify “ideal” capital solutions for worthy projects. The company has a national origination office in Los Angeles, and numerous correspondent and brokerage relationships nationwide.

The firm also has embraced social media and networking via Twitter at http://twitter.com/cambridgecap , via Facebook at http://www.facebook.com/cambridgecap, and via Linkedin at http://www.linkedin.com/companies/454232
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Contact:  Evan Washington, Phone: (312) 521-7603, Fax: (312) 357-1611, E-Mail: ew@cambridgecap.com, Twitter: http://twitter.com/CambridgeCap