Lenders Still Prefer Apartments as a Favorite Property Type
Chicago, IL -- (ReleaseWire) -- 09/13/2006 --Mortgage rates have been increasing throughout the year. Yet by historic standards, rates are a bargain.
When the Fed agreed to stop raising rates in mid August, the real estate capital markets showed signs of relief. Overall mortgage rates settled within the low-6%-range or slightly higher.
Apartment owners should take note of current interest rates which are still relatively low. More specifically, the following five reasons are important factors for considering multifamily financing today:
1. Extremely favorable rates by historic standards. Within the past 25 years, rates have hovered as high as 20% and more recently dipped into the sub 5% range.
2. Not only are overall interest rates low, but mortgage spreads are barely 1% higher than US government treasuries - indicating borrower-friendly pricing.
3. Abundance of layered financing available without giving away equity, including mezzanine financing, secondary debt, etc.
4. Compressed fees and closing costs. Strong competition leads to bundled closing costs priced below typical fees in recent years.
5. Apartment euphoria. Lenders, buyers, and the overall investment public are enamored with multifamily properties. Best terms and conditions are available verses any other property sector.
Nat Zvislo, research director of the Real Estate Capital Institute, says "multifamily properties are the darling of the industry. Rates and terms are far superior to any other properties in the marketplace."
The Real Estate Capital Institute is a research organization dedicated to monitoring commercial property capital markets. With roots dating back to 1983, this volunteer-based organization tracks daily, monthly and annual capital market movements including capitalization and mortgage rates. For further information, visit the Institute website at www.reci.com. Monthly market observations are found at www.ratesnews.com; daily rate, hourly updates are available via the Real Estate Capital Rateline at 773-227-4825.