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U.S. Department of Housing & Urban Development (HUD) has just terminated its debt service reserve requirements on 223(f) refinance and acquisition loans for existing multifamily properties. HUD had previously implemented these requirements in April 2020 in response to the economic instability and increased risk environment caused by COVID-19.  Such requirements included a 9-month debt reserve on market rate projects and up to a 12-month debt service reserve on unsubsidized affordable projects, as more detailed in this article. These requirements were to remain in effect until HUD determined that the real estate markets were no longer adversely impacted by COVID-19. According to HUD, with its release of HUD Mortgagee Letter 2022-03, that time has now come. Additional details are available in HUD's press release.

Adroc Capital is an approved HUD MAP and LEAN Lender. Give us a call for more information or to learn more about HUD loan programs. 

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Interest rates soared on last week’s surprisingly strong jobs report and surging inflation. The Labor Department reported an increase in nonfarm payroll in January of 467,000 jobs, well above Wall Street’s 150,000 estimate. December’s jobs numbers were also revised up, from an initial reported gain of 199,000 to a revised 510,000 new jobs. The Labor Department further reported that the Consumer Price Index for January 2022 is up 7.5% compared to January 2021. This is up from the 7.0% increase reported in December and the highest inflation rate since 1982. A rate hike is expected at the Fed’s March meeting, with forecasts ranging from a 25 to 50 basis points.

Following the news, the yield on the US 10 Yr topped two percent for the first time since June 2019. The yield on the US 10 Yr is now hovering around 2.00%, up approximately 20 basis points over the past two weeks since our last update. Over the same period, HUD interest rates have climbed 30 basis points and is up approximately 50-60 basis points on the year. Check out today’s rates.

HUD Commercial Loan Rate Update – February 14, 2022

• 35-year fixed FHA perm loans: 2.95%-3.15%
• 40-year fixed FHA construction/perm loans: 3.50%-3.70%

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive loan programs?
Click to learn more!

The Bureau of Labor Statistics reported in January that the Consumer Price Index (for all items) increased 7% for the 12 months ended December 2021, the highest inflation rate since 1982. In response, the Fed announced plans to raise rates at the Fed’s upcoming March 15 meeting. Some Wall Street analysts now predict four or more rate hikes this year to combat inflation.

At the same time, the Fed is dialing back its bond buying, announcing plans to purchase just $40 billion in this monthly round. This is down from $120 billion a month pre-November 2021. The dual threat of short-term interest rate hikes combined with the Fed tapering has pushed interest rates up. The yield on the US 10 Yr has climbed 35 basis points since year-end before coming back down recently, closing at 1.79% yesterday.

Despite the writing on the wall, interest rates on FHA commercial loans held steady through much of the latter half of 2021. However, these latest developments are finally making a dent in the HUD interest rate market. Rates have now climbed approximately 20-30 basis points since our last update in June. Check out today’s rates.

HUD Commercial Loan Rate Update – February 1, 2022

• 35-year fixed FHA perm loans: 2.65%-2.85%
• 40-year fixed FHA construction/perm loans: 3.20%-3.40% 

These pricing indications are current as of the date posted, subject to market interest rate volatility.  Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.

Interested in learning more about FHA's attractive loan programs?
Click to learn more!