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Marc to Market (12/15/09) |
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Tuesday, December 15 2009 00:00 |
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Wither Treasuries?
Treasury prices for the Ten Year have tanked over the past week and agency rates have increased to their highest level since August. A ten year 75% LTV fixed rate loan at that we locked 3 weeks ago @ 5.5% would price out today north of 5.9%
The story is twofold: a recovering economy and an overhang of Treasury supply at auction. Today’s reports on industrial production and producer prices (both increased at a faster rate than anticipated) accelerated the increase in rates.
Most analysts predict a gradual increase in rates over the next year as the allure of the safety of the T-bill and bond diminishes, replaced by the fear of inflation and a desire for yield.
However for our Bank clients, there may be some good news as Banks try to push a little more money out the door. We now have Bank lenders that are offering ten year fixed rate hybrid loans at 6.5% or less. And we just got a loan approved that was underwritten on pro-forma rents for 2 vacant apartments in the course of renovation. This is the first flexible underwriting we have seen in quite a while.
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