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U.S. Economy Strong, Fed Raises Rates SHARE
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U.S. Economy Strong, Fed Raises Rates

As expected, the FOMC raised the Fed Funds Target Rate to 2.00%, up 25 basis points. More importantly, the committee shifted its rate projections for 2018 and 2019 higher, signaling that another two hikes this year are likely. In addition, the FOMC upgraded its projection for this year’s GDP growth and inflation and lowered its forecast for the unemployment rate. These actions are to stem an overheating economy at relative full employment as the short supply of labor may lead to wage inflation. However, the Fed believes some of the current economic strength may not persist as 2018’s fiscal stimulus “sugar-high” wears off. The 10-year U.S. Treasury has been trading in a narrow range over the last two weeks and is currently at 2.94%, 50 basis points higher than the beginning of 2018. Commercial real estate fundamentals remain strong and lenders are showing a healthy appetite to put out capital.

U.S. Economy Strong, Fed Raises Rates

Index Rate

 
3-Year Swap 2.89% 
5-Year Swap 2.95% 
7-Year Swap 2.97% 
10-Year Swap 3.01% 
5-Year Treasury 2.81% 
7-Year Treasury 2.9% 
10-Year Treasury 2.94% 
Prime 4.75%
    
 

Multifamily Loan Programs Greater Than $5 Million

 
Fixed Rate Agency Lenders Portfolio Lenders* 
Term LTV Interest Rates LTV Interest Rates 
5 Yr. 55 to 80% 4.92% to 5.35% 55 to 75% 4.30% to 4.50% 
7 Yr. 55 to 80% 4.75% to 5.17% 55 to 75% 4.50% to 4.75% 
10 Yr. 55 to 80% 4.82% to 5.24% 55 to 75% 4.60% to 5.00% 
 
*Rates indicative of national average, Act/360

 

Multifamily Loan Programs Less Than $5 Million

 
Fixed Rate Agency Lenders Portfolio Lenders* 
Term LTV Interest Rates LTV Interest Rates 
5 Yr. 55 to 80% 4.90% to 5.30% 55 to 75% 4.35% to 4.50% 
7 Yr. 55 to 80% 5.10% to 5.40% 55 to 75% 4.55% to 4.75% 
10 Yr. 55 to 80% 5.40% to 5.60% 55 to 75% 4.65% to 5.00% 
 
*Rates indicative of national average, Act/360

 

Bridge Financing

 
Bridge Floating LTV Spread Over Libor 
Stabilized 65% 250 to 425 
Re-Position 80% 300 to 500 
*Portfolio Lenders include Banks, Life Insurance Companies and Credit Unions 

 


Marcus & Millichap is the Largest National Commercial Real Estate Brokerage firm specializing in Real Estate Investment Services with nearly 1,500 investment professionals in 80 offices nationwide. Marcus & Millichap closes 4.5 transactions every business hour more than any other real estate investment brokerage firm in the nation. In 2017, our Chicago offices closed 332 transactions totaling $1.45 Billion. Whether you are looking to Buy, Sell, Hold or Finance Commercial Real Estate Nationally, we can help.

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