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

money."

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

 Jeanne Peck, Executive Director

director@reci.com

www.reci.com