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U.S. Department of Housing & Urban Development (HUD) has just terminated its debt service reserve requirements on 223(f) refinance and acquisition loans for existing multifamily properties. HUD had previously implemented these requirements in April 2020 in response to the economic instability and increased risk environment caused by COVID-19.  Such requirements included a 9-month debt reserve on market rate projects and up to a 12-month debt service reserve on unsubsidized affordable projects, as more detailed in this article. These requirements were to remain in effect until HUD determined that the real estate markets were no longer adversely impacted by COVID-19. According to HUD, with its release of HUD Mortgagee Letter 2022-03, that time has now come. Additional details are available in HUD's press release.

Adroc Capital is an approved HUD MAP and LEAN Lender. Give us a call for more information or to learn more about HUD loan programs. 

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Interest rates soared on last week’s surprisingly strong jobs report and surging inflation. The Labor Department reported an increase in nonfarm payroll in January of 467,000 jobs, well above Wall Street’s 150,000 estimate. December’s jobs numbers were also revised up, from an initial reported gain of 199,000 to a revised 510,000 new jobs. The Labor Department further reported that the Consumer Price Index for January 2022 is up 7.5% compared to January 2021. This is up from the 7.0% increase reported in December and the highest inflation rate since 1982. A rate hike is expected at the Fed’s March meeting, with forecasts ranging from a 25 to 50 basis points.

Following the news, the yield on the US 10 Yr topped two percent for the first time since June 2019. The yield on the US 10 Yr is now hovering around 2.00%, up approximately 20 basis points over the past two weeks since our last update. Over the same period, HUD interest rates have climbed 30 basis points and is up approximately 50-60 basis points on the year. Check out today’s rates.

HUD Commercial Loan Rate Update – February 14, 2022

• 35-year fixed FHA perm loans: 2.95%-3.15%
• 40-year fixed FHA construction/perm loans: 3.50%-3.70%

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive loan programs?
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The Bureau of Labor Statistics reported in January that the Consumer Price Index (for all items) increased 7% for the 12 months ended December 2021, the highest inflation rate since 1982. In response, the Fed announced plans to raise rates at the Fed’s upcoming March 15 meeting. Some Wall Street analysts now predict four or more rate hikes this year to combat inflation.

At the same time, the Fed is dialing back its bond buying, announcing plans to purchase just $40 billion in this monthly round. This is down from $120 billion a month pre-November 2021. The dual threat of short-term interest rate hikes combined with the Fed tapering has pushed interest rates up. The yield on the US 10 Yr has climbed 35 basis points since year-end before coming back down recently, closing at 1.79% yesterday.

Despite the writing on the wall, interest rates on FHA commercial loans held steady through much of the latter half of 2021. However, these latest developments are finally making a dent in the HUD interest rate market. Rates have now climbed approximately 20-30 basis points since our last update in June. Check out today’s rates.

HUD Commercial Loan Rate Update – February 1, 2022

• 35-year fixed FHA perm loans: 2.65%-2.85%
• 40-year fixed FHA construction/perm loans: 3.20%-3.40% 

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive loan programs?
Click to learn more!

U.S. Department of Housing & Urban Development (HUD) published updated Annual Indexing of Basic Statutory Mortgage Limits for Multifamily Housing Programs and its Annual Revisions to Base City High Cost Percentage. The base statutory per-unit lending limits are unchanged from 2020, while local high cost multiplier factor adjustments were updated in some cities.

HUD insured loan programs offer long term, low interest rate financing for new construction and permanent financing for qualifying affordable housing and market rate apartment projects.  The popular Section 221(d)4 and 223(f) multifamily loan programs offer loan amounts up to 85%-90% LTV / LTC (80% for cash-out refinances) supported by a 1.176x – 1.11x DSCR.  However, loan proceeds available under these programs are subject to HUD’s statutory per unit lending limit caps.

The following are the published Basic Statutory Mortgage Limits for Calendar Year 2021 for Section 221(d)4 and 223(f) loan programs:

The statutory mortgage limits serve to limit HUD’s exposure to an individual project by capping loan proceeds on a per-unit basis. Although most projects remain unaffected, HUD’s statutory mortgage limits are increasingly becoming a factor as interest rates and cap rates have come down which have pushed up market values and supportable debt. HUD’s statutory lending limits have not kept pace as annual statutory limit adjustments are based only on changes in the Consumer Price Index.  Statutory lending limit waivers have also become more difficult to obtain based on updated guidance from HUD. 

Additional details are provided in the formal published notices linked to above. Contact Us for more information and to learn more about HUD loan programs. 

Interested in learning more about FHA's attractive loan programs?
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Inflation concerns are accelerating the Fed’s timetable for short-term interest rate hikes. After setting expectations of no interest rate hikes until 2024 in March, the Fed is now estimating two interest rate hikes in 2023. The reopening of the U.S. economy following massive fiscal stimulus, an extended period of low interest rates, and the Fed’s bond purchases on the open market in response to the COVID-19 pandemic has fueled a surge in inflation. The CPI index rose at an annual rate of 5% in May, the highest increase since August 2008. The Fed now expects inflation to rise 3.4% this year, well above the Fed’s 2.4% prediction in March. Notwithstanding, the Fed will continue with its $120 billion monthly bond purchases, although tapering discussions are not too far off.

The yield on the US 10 Yr moved up following the Fed’s update, closing at 1.57% yesterday. The Fed’s continued asset purchases should hold interest rate levels down. For how long remains to be seen.

Interest rates on FHA commercial loans are relatively stable since our last update in March. Check out today’s rates.

FHA Commercial Loan Rate Update – June 17, 2021

• 35-year fixed FHA perm loans: 2.45%-2.65%
• 40-year fixed FHA construction/perm loans: 3.00%-3.25% 

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive 223(f) refinance loan program?
Click to learn more!

Interest rates continued to climb this morning following President Biden's signing of the American Rescue Plan yesterday. The massive $1.9 trillion COVID-19 economic relief package combined with the expanding vaccine rollout and declining new cases in the U.S. has brought optimism on the economic front. Massive fiscal stimulus passed along with pent up demand associated with the pandemic – which just marked its one-year anniversary in the U.S. – is spurring talks of inflation. Indeed, Fed Chairman Powell said that he expects some inflationary pressures as the economy reopens.

Interest rates were anticipated to stay at historic low levels so long as the pandemic continued to run rampant, but the vaccine rollout and its high effectiveness has brought a sense of calm. The nation’s mood has shifted: there’s light ahead, the worst is behind us, and we’re seeing that now play out in the markets. The yield on The US 10 Yr is now up approximately 70 basis points over the past 2 months and at its highest level in more than a year. It would be even higher if not for the Fed’s ongoing commitment to keep buying bonds until the economy fully recovers.

Interest rates on FHA commercial loans are significantly higher since our last update in late December. Expect some interest rate volatility as the economy begins to reopen. Check out today’s rates.

FHA Commercial Loan Rate Update – March 12, 2021

• 35-year fixed FHA perm loans: 2.50%-2.75%
• 40-year fixed FHA construction/perm loans: 3.20%-3.45% 

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive 223(f) refinance loan program?
Click to learn more!

The COVID-19 pandemic continues to be the chief impetus behind this steady low interest rate environment. Not even a $900 billion COVID-19 relief aid bill passed by Congress late Monday is making a dent. News earlier this week of a more contagious virus strain coming out of the U.K. had investors seeking safer Treasury assets pushing the US 10 Yr below 0.90%. So far in Q4 2020, the yield on the US 10 Yr has traded within a tight 30 basis points between 0.68% and 0.98%, while MBS spreads have widened and tightened in response to these slight fluctuations, keeping interest rate pricing relatively flat.

Interest rates on FHA commercial loans continue to be around the same levels since our last update in late August. Expect interest rates to hang around these levels as long as the COVID-19 pandemic continues to play. Check out today's rates.

FHA Commercial Loan Rate Update – December 22, 2020

• 35-year fixed FHA perm loans: 2.15%-2.40%
• 40-year fixed FHA construction/perm loans: 2.90%-3.15% 

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive 223(f) refinance loan program?
Click to learn more!

Fed Chairman Jerome Powell announced yesterday a shift in the Fed’s inflation policy that will delay future rate increases and extend this low interest rate environment. The Fed will now target an average inflation rate of 2%, allowing for the inflation rate to exceed 2% before considering a lift in interest rates. Previously, the Fed looked to keep the inflation rate at or just below 2%, and indications of surpassing such threshold were met with interest rate increases intended to cool the economy and rein in inflation. Between 2015 and 2018, the Fed raised rates nine times as the inflation rate crept above 2%. The Fed may now be content with an inflation rate in the range of 2.25%-2.50%, noted Dallas Fed President Robert Kaplan in an interview with CNBC. This policy change will keep interest rates down longer.

With rates expected to stay low, MBS spreads to the US 10 Yr have tightened, and Ginnie Mae MBS investors have lowered the interest rate floor. Check out today’s improved rates.

FHA Commercial Loan Rate Update – August 28, 2020

• 35-year fixed FHA perm loans: 2.15%-2.40%
• 40-year fixed FHA construction/perm loans: 2.90%-3.15% 

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive 223(f) refinance loan program?
Click to learn more!

The Fed announced earlier today its continued commitment to supporting low interest rates during COVID-19 until the economy rebounds. Interest rates have remained steady at these low levels since the Fed revived and expanded its QE policy. The yield on the US 10 Yr has stayed within a tight range, ranging from 0.59% to 0.75% since June 15. Spreads to the US 10 Yr have tightened some, although still remain 20 to 30 basis points higher than pre-COVID-19 levels. Interest rates on commercial Ginnie Mae MBS are slightly improved since our last update. Check out today’s rates.

FHA Commercial Loan Rate Update – July 29, 2020

• 35-year fixed FHA perm loans: 2.30%-2.45%
• 40-year fixed FHA construction/perm loans: 3.00%-3.20% 

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive 223(f) refinance loan program?
Click to learn more!

U.S. Department of Housing & Urban Development (HUD) has published updated Annual Indexing of Basic Statutory Mortgage Limits for Multifamily Housing Programs and its Annual Revisions to Base City High Cost Percentage.

HUD insured loan programs offer long term, low interest rate financing for new construction and permanent financing for qualifying affordable housing and market rate apartment projects.  The popular Section 221(d)4 and 223(f) multifamily loan programs offer loan amounts up to 85%-90% LTV / LTC (80% for cash-out refinances) supported by a 1.176x – 1.11x DSCR.  However, loan proceeds available under these programs are subject to HUD’s statutory per unit lending limit caps.

The following are the published Basic Statutory Mortgage Limits for Calendar Year 2020 for Section 221(d)4 and 223(f) loan programs:

The statutory mortgage limits serve to limit HUD’s exposure to an individual project by capping loan proceeds on a per-unit basis. Although most projects remain unaffected, HUD’s statutory mortgage limits are increasingly becoming a factor as interest rates and cap rates have come down which have pushed up market values and supportable debt. HUD’s statutory lending limits have not kept pace as annual statutory limit adjustments are based only on changes in the Consumer Price Index.  Statutory lending limit waivers have also become more difficult to obtain based on communications with HUD. 

Additional details are provided in the formal published notices linked to above. Contact Us for more information and to learn more about HUD loan programs.

Interested in learning more about FHA's attractive loan programs?
Click to learn more!