The Income Property Blog
Category Archives: interest rates
April 2012 Mortgage Rate Indices
Here again are the latest rates commonly used for variable rate apartment loans:
Note: All rate indices are lower this month. The 12-MTA Rate is again at it’s lowest level in 10 years.
Apartment Loans by Agencies Creating Bubble, Chandan Says
With interest rates on apartment loans at all time lows and the demand for apartment investments strong, Sam Chandan, a real estate economist, issues a report cautioning investors that owners may not be able to refinance when their new adjustable rate loan rises; rent growth may not remain sustainable to service the debt at higher interest rates.
From Blooomberg Businessweek:
Low-cost financing backed by the U.S. government is inflating the values of apartment buildings and threatening to create a bubble, according to a report by Sam Chandan, a real estate economist.
Recovery of Commercial Property Fueled by Apartments: Mortgages
“The interest rate for a 10-year fixed multifamily loan designated for purchase by Fannie and Freddie was 4.1 percent, as of March 2, according to New York real estate investment banking firm Cushman & Wakefield Sonnenblick Goldman.”
From Bloomberg Businessweek comes this article about how apartment lenders are recovering from their losses.
When Arenda Capital Management LLC bought an Atlanta apartment complex whose owners defaulted on a $26 million loan, they did something distressed investors rarely do: They paid full price, deciding not to wait for lender LNR Partners to foreclose and face competition from other acquirers.
Signs of a Housing Recovery?
The Economist has an interesting article on the U.S. housing market and its “tantalising signs of a durable recovery”.
THE reanimation of America’s housing market has been a long time coming. Residential building last contributed positively to growth in 2005. Housing-construction employment has dropped 43% since then. Government efforts to resuscitate the market have flopped. Yet tantalising signs of a durable recovery are emerging at last. The National Association of Home Builders’ index of builder confidence rose for a fifth consecutive month in February, to its highest level since May 2007 (see chart). Sales of previously-owned homes rose 4.3% from December to January. The housing overhang is receding. The number of homes for sale dropped 21% in the year to January, to just over six months of supply—a “normal” level.
March 2012 Mortgage Rate Indices
Here again are the latest rates commonly used for variable rate apartment loans:
Note: The 12-MTA Rate is at it’s lowest level in 10 years.
Source: www.moneycafe.com
Mortgage Rate Indices for Apartment Owners
The Interest Rate Indices chart below shows the last ten+- years for each of the major interest rate indices used by apartment lenders. Most adjustable rate apartment loans are based on these indices:
- 1 Month LIBOR Index (for London Inter-Bank Offered Rate)
- 6 Month LIBOR Index
- 12 Month Treasury Average (also known as the 12-MTA or 12-MAT) and the
- 11th District Cost of Funds (also known as COFI or 11DCOF) Index.
In my firm, we track each of these indices and report to our clients what their underlying mortgage rate index is for their loan and how it is trending, i.e., whether their mortgage rate is headed up or down.
Update on Common Mortgage Rate Indices – January 2012
Interest Rate Indices