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| 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:
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* 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
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