15 October 2008
Multi-Family Financing Available and Reasonable

Permanent Financing Availability, Cost Remains Reasonable.

The MULTI-FAMILY SECTOR is relatively isolated from Wall Street. But REITs (Real Estate Investment Trusts) are being impacted. Their dividend yield rate is falling, which is making it difficult for them to get deals done.

The LIBOR RATES have been bouncing around in the last three weeks. The Bank of England sets the target LIBOR rate and controls it by injecting money into the bank. But due to the credit crunch in the U.K., that hasn't been easy to do. This has caused the LIBOR rate to go up.

No one wants money in savings these days and this is driving treasury rates down and causing the spreads to widen. Having said that, the overall best debt rate you can find for MULTI-FAMILY loans right now is 6 percent, which is pretty good.
 
With three-month LIBOR at 4.8 percent, a 250 bpt spread produces a 7.3 percent interest rate and a constant in the 8.3 percent range with a 30-year amortization schedule. This compares to rates in the 5 percent range, with no required amortization before the credit crisis.

The stock market activity in the past few days has not had a tangible effect so far on the availability or cost of MULTI-FAMILY financing. The stock market over the past few days has had no effects other than on the valuation of the multifamily company stocks.
 
Mortgage liquidity for MULTI-FAMILY continue to be relatively strong because of Fannie Mae and Freddie Mac. Rates remain competitive.
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Filed under: Market Conditions, Rates, Interest Rates, Multi-Family, Apartment Buildings