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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.

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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

Real Estate Articles from Inman News

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