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| Jeanne Peck |
Chicago, IL – The Real Estate Capital Institute noted in
September that other than improved CMBS market conditions, much of the focus
within the realty capital markets leans toward treasury behavior. Monthly highlights are as follows:
The gap between life companies and CMBS debt is narrowing as
Wall Street
returns with a vengeance.
Conduit loan spreads have tightened by as much as
much as half a point during the past two months. The net effect is substantially more
competition for longer term permanent loans. Banks comfortably dominate funding
arena for terms of five years or less, including floating-rate debt.
Even though new construction home sales recently fell,
prices posted the largest increases since before the Great Recession. The housing recovery is uneven and is tied to job growth in select metro areas. In some cases, a shortage persists for lower
priced units!
Fixed-rate home mortgages, again, dropped to record low
level-s below 3.5%. Such persistently low rates seem to prove the Fed's monetary
policy soundly impacts housing.
Treasury rates dropped during the last half of September -
proof that the fed is trying to address a drop in domestic consumer
spending within a fragile economic recovery.
Slower growth in China and certain troubled European Union economies add
more concern. Expect rates to stay at
low levels in the foreseeable future.
Credit lines, letters of credit and other unsecured
bank-related financial instruments are still challenging to obtain. Banks seek
strong collateral backing any type of transactions, erring on the side of
caution as far as credit risk; they cannot afford to under-collateralize their
investments.
Jeanne Peck with The Real Estate Capital Institute
opines, "with mortgage rates at such low levels, much of the attention is
towards improving property financial performance."
She adds, "Debt
pricing for core properties is at commodity levels, meaning lenders compete on
leverage levels and structure at this time, it's not just about having capital available
to lend."
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.
Contact:
Jeanne Peck,
Executive Director
The Real Estate
Capital Institute(r)
3517 West Arthington Street
Chicago, Illinois USA 60624
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