NEW YEARS INCOME PROPERTY MORTGAGE MARKET UPDATE 2016

NEW YEARS MARKET UPDATE

JANUARY 4, 2016

   The FED has finally raised the Fed Funds Rate while other central banks around the world are continuing to provide accommodations to bolster their sagging economies resulting in a strong Dollar, currently standing at $1.080 vs. the Euro compared to $1.22 this time last year. Most notable, China' s bubble appears on the verge of bursting as their manufacturing and exports have slowed dramatically, putting a big hurt on global providers of natural resources. China's deteriorating economic situation along with ISIS concerns and the deteriorating situation in the Middle East is once again leading global investors to the US as the continued safe haven. This came through loud and clear as the dollar strengthened further and global investors flocked to the US Treasuries Monday morning on the additional negative news regarding the above concerns. This news saw the 10-Year Treasury yield drop from 2.30% to 2.22% Monday morning. Frankly, I am surprised the FED did not wait until Spring to start raising rates given the aforementioned issues. Oil has dipped below $35/brl (currently at $37.04) down from $70 this time last year as Saudi Arabia continues to keep output high, looking to bankrupt Russia , which is escalating its attacks along with France on Syria, testing the true allegiances of Turkey and Saudi Arabia. Meanwhile, US oil reserves stand at the highest level in history, while Global tensions are at a pitch level as the World unites against ISIS, hoping the US will step up and play a more serious roll.
 

   The 10-year Treasury moved up 8 bps on the Fed Funds increase to 2.30% last month now at 2.22%.  All of this considered, the FED still appears determined to continue with additional increases in the Fed Funds Rate throughout this year.  So, with lenders looking to make their new allocations for the year sooner than later, it would appear obvious that this would be the time to take advantage of their timing and proceed with any financing needs, if you are in a position to do so.

MORTGAGE MARKET UPDATE

   2015 was a great year for us at WESTCAP, and 2016 is already positioned to start with a bang. Life companies and CMBS lenders are geared up for bigger allocations this year. As in the past, early in the year tends to be the best time to expect more favorable treatment, as underwriting typically becomes more conservative later in the year as allocations start to be achieved. We are seeing construction lenders becoming more conservative as additional restrictive Dodd Frank regulations kick in requiring higher reserves of the banks and more conservative underwriting.

CURRENT COMMERCIAL REAL ESTATE FIXED LIFE COMPANY RATES

                              5 Year                  10 Year                   20 Year
Multifamily   3.31%-4.01%        3.62%-$4.32%        4.19%-4.94%
Retail             3.51%-4.21%        3.82%-4.52%          4.39%-5.14%
Office            3.56%-4.26%        3.87%-4.57%          4.44%-5.19%
Industrial       3.41%-4.11%        3.72%-4.42%          4.29%-5.04%

   WESTCAP is a founding member of Q10 Capital, which was formed in 1988, and is a network of 18 of the largest independent mortgage banking companies in the country with a combined servicing portfolio in excess of $15 Billion. With a proprietary database sharing quotes, lender and equity intelligence we are constantly in a position to insure that we deliver the best sources at any given time for our clients.
  

   Call for rates on hospitality, self-storage, student and senior housing. Our CMBS sources continue to be very busy with rates running slightly higher than that of our life companies. In addition, we have a long list of relationships with active construction and bridge lenders for all product types. We even have a couple of bank sources which offer no prepayment penalty and a few who offer non-recourse. With a few exceptions our permanent lending sources are PAR to us.

   WESTCAP serves as a correspondent to 15  life insurance companies for, which we service over $1.5 billion, and other sources of capital in order to meet all of our client's financing needs. Most of these correspondent relationships date back over 25 years, including Sun Life of Canada for which we have been the exclusive correspondent in Southern California for almost 30 years. We are handling assignments ranging from $1,000,000 to $400,000,000, and represent all sizes of borrowers including some of the largest developers in Southern California.

Steve Bridges
Executive Vice President
WESTCAP CORP
9960 Irvine Center Drive
Irvine, CA 92618
Office: (949) 387-9061  Cell: (949) 235-1540
       sbridges@westcapcorp.com                  https://www.linkedin.com/in/SteveBridges2                 

                                   www.westcapcorp.com
                                 CA RE Broker: 00465840