Rates are Still Low
While we have seen a little run up in our rates over the past month or so, our rates still remain historically low. Let’s put some perspective on rates.
Looking back at interest rates from 1965 to 2003 – a period spanning almost 40 years – you’ll see that rates never went lower than 5.23%. Today, sub-5% interest rates still prevail, and the smart developers and owners are taking advantage of these historically low rates. Demand for rental housing remains strong and many underserved markets remain. In short, opportunity still abounds for our clients.
Short of asking the Chairman of the Federal Reserve to stay off television, there is little we can do to control the dramatic volatility we have witnessed of late. However, it is important to recognize that it was the severity of the recent rise in rates that was unsettling – not where rates have since settled. At least for now, rates have stopped their ascent, stabilizing at sub-4% for permanent loans and sub-5% for 40-year construction loans. So while the spike in rates took everyone by surprise, more normal market conditions now prevail.
What is in our control as a trusted lender is how we manage our clients’ transactions while remaining true to our mission statement: “To provide outstanding results for each one of our clients.” We’re proud to live up to that mission every single day, and we’re ready to help you execute on these historically low rates while they last.
Love Funding recently closed our first two transactions under a new HUD pilot program designed to expedite processing times for the acquisition or refinance of affordable rental apartments with Low Income Housing Tax Credits (LIHTCs).
We used the pilot program to secure two loans totaling $21.7 million to fund the acquisition of Coral Wood Court Apartments in Reseda, CA and Orangewood Court Apartments in Sherman Oaks, CA. The buyer of the two properties was WNC & Associates, an Irvine-based firm that has been active in the affordable housing industry since 1971. The loans were underwritten by Love Funding Chief Underwriter Denise Troeschel, who has decades of experience underwriting affordable housing loans.
The U.S. Department of Housing and Urban Development introduced the LIHTC pilot program last year to help preserve affordable apartment properties in select markets. It has since been expanded nationwide. The program, which dramatically accelerates HUD application processing and increases the allowance for renovation and repairs, is supporting the acquisition and rehabilitation of affordable housing properties across the country at a time when the shortage of such housing is growing.
Both Coral Wood Court and Orangewood Court set aside 10 percent of the units for households with incomes at or below 50 percent of area media income (AMI), with the rest of the units reserved for those at or below 60 percent AMI. HUD’s pilot program also applies to projects with Section 8 HAP contracts. Continue Reading
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