This discussion is regarding commercial mortgage rates for loan amounts between $500,000 – $10,000,000 and for owner user type loan requests as well as non-multifamily investment properties, such as office, retail, and industrial as well as special purpose properties, such as restaurants.
The good news is that rates are still at very low levels when looked at historically, however many of the indexes that commercial mortgages are tied to have increased dramatically in the last 30-45 days. For example the LIBOR SWAP Rates have jumped up between 40 and 75 basis points in this time period.
No one really knows why this is occurring as the FEDS are doing all in their power to reduce and maintain low commercial loan rates. You may have heard of the Quantitative Easing measures that have been implemented by Bernanke. Regardless of the reasons why, rates have gone up by .5% – .7%.
Also related, and is good news, is the fact that conventional commercial mortgage lending is starting to come back, more and more. Over the last 2 years most of the loan programs out there have been backed by the government through such programs as the SBA. Now however, non-government backed loan programs are coming back and this means more competitive pressure in the market. Which translates into more loan options for borrowers, increased underwriting flexibility and a reduction in commercial mortgage rates on the banks margin side. More competitive pressure is the best news possible for commercial mortgage borrowers.
This is because the commercial loan ratehas two components, one is the index and the other is the margin that the bank charges. The combination of the two is the “effective rate” or your rate on the loan. Currently, margins are at some of the highest levels seen in decades. At between 4 – 6%, compared to 1.25%-2.25% that was normally charged in 2006 – 2007. As the competitive pressures step up, banks will lower these margins in an effort to win deals. And borrowers will enjoy more aggressive lending standards.
Posts Tagged ‘Loan Options’
Mortgage Rates and Current Mortgage Rates
July 25th, 2010
Current mortgage rates are at an all-time low providing homebuyers many loan options throughout the buyer friendly housing market. Present mortgage rates are very appealing to consumers looking to purchase their first home, move up the ladder to an upscale house, or refinance the present home. current mortgage rates offered through many mortgage loan companies are highly competitive, offering consumers leverage while negotiating the best rates for their financial situation. Varying mortgage rates are found among the many mortgage loans that offer adjustable and fixed rate loans. It is possible to get extremely low mortgage rates today as a result of the continuing trend in low, current mortgage rates.
According to many financial specialists that closely watch mortgage rates and their fluctuating trends, it is not known how long the current mortgage rates will continue. If you are considering purchasing a home or refinancing your present home, the current mortgage rates could be the last, low rates you may see for some time. Of course, low mortgage rates are not the only consideration in determining the best mortgage for your circumstances. Your overall financial situation will also determine which of the current mortgage rates you choose within your loan package. current mortgage rates affect an adjustable or fixed rate mortgage loan.
Your down payment amount plays a large role in determining which mortgage rates you are offered. Many consumers today are only able to put down 10% or even 5% of a house purchase price toward the down payment. This will automatically result in higher mortgage rates offered by your lending source regardless of the lower trend in current mortgage rates. A down payment of 20% or more will significantly affect your ability to secure low mortgage rates. Other factors affecting the best, current mortgage rates you qualify for, will be your credit history and your earning-to-debt ratio. Lending sources generally offer the best, current mortgage rates to those who have an impeccable credit report, large disparity between earnings and personal debt and the amount of down payment that is placed.
Lending sources offer the best mortgage rates to consumers with these credentials because the risk of default is very slim. However, many American homebuyers do not have a perfect financial history and lenders are expert in offering many loan options with differing mortgage rates. The current mortgage rates are definitely consumer friendly and it is to your best advantage to shop around the competitive lender market for the best loan package you can find. Many online sources offer free consultations to help you determine your best option. “For the Son of man is come to seek and to save that which was lost.” (Luke 19:10)
