2014 11 The Real Estate Capital Scoreboard®

2014 11 The Real Estate Capital Scoreboard®. Yield Compression for Private Mortgage Investors in California

2014 11 The Real Estate Capital Scoreboard® video duration 2 Minute(s) 41 Second(s), published by RECI on 15 07 2019 - 13:20:32.

Chicago, Illinois, November 3, 2014 – In the past couple of weeks, mortgage rates dropped to their lowest level since earlier in the summer, only to rebound Barry Habib of MBS Highway predicts "the lowest mortgage interest rates we've ever seen." - listen in as Barry reveals EXACTLY WHY in this Masterclass .

. . Rob Sechrist from Pelorus Equity Group gives his take on yield compression for private mortgage investors and the reason why many hard money lending firms .

Chicago, Illinois, November 3, 2014 – In the past couple of weeks, mortgage rates dropped to their lowest level since earlier in the summer, only to rebound upward by about over quarter percent after the stock markets rallied to their best levels in over a year. Global anxieties overshadow an improving American economy, keeping bond yields near record-low territory. Instant volatility prevails ignited by any news outbreak such as the Middle East, Ebola and Russia, rattling Treasurys by 10 to 20 basis points in within a day.

On the other side of the equation, mortgage spreads keep declining from their historical norms. Currently spreads are about ten to twenty basis points narrower than the averages for the past three decades. The outlook for commercial real estate mortgages is strong despite erratic Treasury note behavior. A stronger domestic economy is definitely buoying commercial property fundamentals, generating a very narrow mortgage pricing band across multiple asset classes. For instance, equally-leveraged office properties trade only about five basis points wider than multifamily assets; Industrial and retail rates are nearly equally priced. Only a month ago, the rate premiums between various property types varied as much as ten basis points.

Quickly tightening mortgage spreads occasionally create unique yield inversions, as many investors are caught off guard. In some cases, the mezzanine and preferred equity tranches actually priced lower than the higher-risk components of senior debt. Freshly-priced mezz/pref equity funds were blended with older, higher-priced senior debt lining up for securitization.

Even all of the market instability, 2014 will shape up to be a record-year for the industry. An ever-expanding list of capital sources continue to look for funding opportunities as mortgage yields are still relatively attractive in relationship to corporate and government bonds. Nearly all institutional investors now view mortgage debt as a legitimate investment vehicle as securitization data provide clear yield and performance benchmarks.

“Uncertainty prevails, but low interest rates are definitely supporting a strong real estate market.” says Jeanne Peck of the Real Estate Capital Institute®.