July 22, 2020
Research by Kidder Mathews shows multifamily lending in Seattle and the Puget Sound region was keeping pace with 2019, at least until COVID-19 hit. A new report reveals multifamily loan originations in the Puget Sound Region surged 29% in 2019 to $12.5 billion. Q1 2020 originations were essentially flat year-over-year, both in terms of loan count and total balances.
Alex Mundy says, “Following sharp drops after the Federal Reserve slashed rates in March, key interest rate benchmarks have remained mostly stable. While historically low benchmarks do not necessarily translate to historically low rates for apartment owners in all situations, there has never been a better time to refinance a conservative loan. When it comes to acquisitions and construction loans, they are more challenging.”
Debt funds, broadly including non-bank lenders like pension funds, REITS, and syndicated pools, saw an incredible surge in lending activity in 2019, Kidder’s Mundy writes. These groups lend to both private and institutional investors, and surpassed life insurance companies in regional 2019 loan originations.
Interest rate benchmarks have been mostly steady since late March. For borrowers looking for low leverage loans, rates have never been better. For high leverage and opportunistic deals, lenders remain selective.
“Although there are fewer active lenders in the market than there were six months ago, in some cases rates are available in the 2.5% to 3.0% range, and for those investors, it’s the right time to take advantage,” concludes Mundy.
For comments, questions or concerns, please contact Dennis Kaiser