Real Estate Capital Scoreboard® – June, 2019

Chicago, Illinois, June 3, 2019 – Interest rates continue heading into record-low territory. Over the past month, rates dropped about 40 basis points, approaching the lowest levels of the current administration. Key concerns focus on slowing global economic growth and the US trade war with China/Mexico. Fed fund futures suggest a quarter point rate decrease is on the horizon by this fall.

Mortgage rate spreads remain unchanged for both long-term and short-term pricing. Higher leverage multifamily debt (80%) can be had in the lower 4%-range with agency debt. Life companies offer loans in the higher 3%-range with more modest leverage (65% or less). Debt funds and conduits compete in the 4.5%-to-5.25% range based on a wider risk and leverage profile. Banks also hover in the 4%+ rate territory for floating rate debt.

Regardless of lending format, rates are extremely competitive by historical standards. Pricing differences between various funding programs and lender types are at very tight margins. Some lenders are pulling out of debt markets due to profitability concerns. However, the supply of mortgage funds is abundant.

John Oharenko, director of the Real Estate Capital Institute®, notes “Interest rate worries are overshadowed by the overall economic outlook. That said, real estate markets are mostly healthy. “

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