COMMERCIAL NOTE BUYERS BACK OFF
WHILE CASINO LENDING INCREASES
CMBS lenders are tightening up
loan parameters as B-note buyers, bond investors and ratings
agencies put on the brakes with interest rate spreads widening.
B-note buyers will be pickier about the notes they buy and will
spend more time kicking questionable loans out of CMBS packages.
Conduit lenders will have to take back loans booted from the
packages thus tightening up underwriting standards. The main
concern has been the growth of interest-only loan approvals.
In the same area we have a
variety of financing from banks, investment bankers, foreign
companies and private lenders move into the gambling house. Bank of
America leads the stakes and has a $4 Billion dollar outstanding
casino loan portfolio. Financing the casino world is different than
for most other property types. The amount of debt that can be
available for a project is not based upon the traditional LTC or
LTV, but upon a multiple of cash flow. An example is a $200 million
dollar loan might be underwritten to five times cash flow. Most
loans are LIBOR-based with an average spread of 1.5% to 2.5% range.
Mortgage rates up on job news
Borrowers wise to refi before further increases
Thursday,
April 12, 2007
Mortgage rates
were up again this week on news the economy added an impressive
180,000 non-farm jobs in March, Freddie Mac reported today in its
weekly survey.
The 30-year
fixed-rate mortgage rose to an average 6.22 percent from 6.17
percent last week, Freddie Mac reported, and the 15-year fixed rate
grew from 5.87 percent to 5.9 percent. Points, which are fees
lenders charge for loan processing expressed as a percent of the
loan, averaged 0.4 on the 30- and 15-year loans.
Adjustable-rate
mortgages also became a little more expensive this week, as the
five-year Treasury-indexed hybrid ARM grew to an average 5.93
percent from last week's 5.92 percent and the one-year
Treasury-indexed ARM gained from 5.44 percent to 5.47 percent.
Points on these loans averaged 0.5 percent.
"Interest rates in
general ticked up following the release of the March employment
data, which showed stronger job growth than what the market
expected," Frank Nothaft, Freddie Mac vice president and chief
economist, said in a statement. "This brought interest rates on
30-year fixed-rate mortgages (FRMs) back up this week to match the
first-quarter average."
Nothaft said home
loan refinancing is running strong, as a large share of borrowers
"are doing so to avoid an adjustment to their monthly payment"
before the initial period on their adjustable loan expires or to
"extract equity through a cash-out refi."
The following is a
sampling of Bankrate.com's average 30-year-mortgage interest rates
this week in some U.S. metropolitan areas:
New York - 6.32 percent with
0.03 point
Los Angeles - 6.32 percent with
0.41 point
Chicago - 6.42 percent with 0.08
point
San Francisco - 6.25 percent
with 0.5 point
Philadelphia - 6.32 percent with
0.28 point
Detroit - 6.37 percent with 0.01
point
Boston - 6.4 percent with 0.03
point
Houston - 6.28 percent with 0.44
point
Dallas - 6.19 percent with 0.47
point
Washington, D.C. - 6.23 percent
with 0.51 point
