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| John Oharenko |
Chicago, IL -- The Real Estate Capital Institute® of Chicago reports
June was another excellent month for borrowers.
Key rates moved down about twenty basis
points. The 10-year benchmark treasury continues trending lower, flattening
in the two-percent range.
Furthermore,
lenders are holding spreads, resulting in permanent mortgage rates starting in
the mid-three-percent range. Overall rates dropped by nearly a half
percent this past quarter. A mid-year summary of lender profiles is as
follows:
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GSEs/HUD: Remaining among the most
competitive sources for multifamily loans, agencies prioritize “green” and
“affordable” loans.
Agencies
are also refining their "uncapped" and "capped"
underwriting to reflect more balanced lending distributions. Watch for
more announcements as the government remains committed to privatizing the
agencies.
Meanwhile,
the FHA is targeting more loans located within Opportunity Zones, including
faster processing timelines and reduced fees.
Life
Companies:
With no rate hikes in sight, Lifecos offer forward-delivery loans thru yearend,
with minimal premiums.
For lower-leverage debt priced in the lower-three-percent range (e.g., 60% LTV
or less), life companies attempt to recapture yields, selectively increasing
spreads by as much as twenty basis points.
Rate
floor discussions resurface but lack widespread acceptance, as too much
competition still exists. Variable-rate loan demand is weak, as pricing
starts at 225 basis points, climbing to nearly 400 basis points for more
structured debt.
Wall
Street:
CMBS debt origination to date is slightly higher than last year.
New origination is hampered by minimal refinance opportunities for
stabilized assets.
Meanwhile, debt funds battle within an
extremely competitive lending environment, even on higher leverage loans for
properties in transition
Banks: Like other mortgage
lenders, banks scramble to find profitable loans in commercial real estate,
while still maintaining underwriting discipline. This lending sector
traditionally remains the most competitive source for construction and
short-term debt, where payment flexibility matters.
The
director of the Real Estate Capital Institute®, John Oharenko, advises,
"Three words describe CRE lending: Competition. Competition. Competition!"
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.
CONTACT:
John Oharenko
john.oharenko@reci.com
Executive Director
The Real Estate Capital Institute®
3517
West Arthington Street
Chicago,
Illinois USA 60624
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