The mortgage market has remained in a narrow range for the past several months. We feel the interest-rate complex is currently in a holding pattern until there is evidence of inflation getting closer to the 2% Fed target rate, or unemployment rises to a level of creating concern for the Federal Reserve. Neither one of these is occurring at this moment, but we are one or two CPI and employment reports away from a potential breakthrough in rates trending down.
One of the wild cards in all the above is how tariffs are going to impact inflation. Some pundits argue that the tariffs are inflationary, while others take a 180-degree view that they will have minimal impact on prices. This is one of, if not the biggest, points the Fed is waiting for clarity on.
As far as the mortgage market is concerned, rates have remained steady in the mid-to-high six-percent range. As a reminder, we offer a full spectrum of residential loan products that do not require any type of tax returns. These loans are based on bank statements and/or rental income on the property, a strong fit for self-employed borrowers with major write-offs that minimize AGI on tax returns.
Many multifamily and commercial loans are maturing, which requires cash for the payoff or refinancing. Some of these existing loans will roll rather than being due, but the new rate based on the original paperwork is almost always higher than we can offer with a new refinance loan. Cash-out is also available.
A few notable recently closed loans
- $13M sale in Bel Air: 70% loan. We established a banking relationship with one of our lenders that made the terms possible, with the borrower retaining his two other homes.
- $4.25M sale in Los Feliz: 80% loan. Challenging underwriting utilizing existing income, but allowing income from a new contract to the buyer’s corporation vs. individually from a major studio.
- $2.5M cash-out refinance: 18-unit apartment loan in Silver Lake. We worked with the borrower to buy out partners as part of a nine-property dissolution, requiring extensive involvement with the partners, title, and escrow.
- 95% loan: $1,209,750. The client is a professional who just graduated into their first documented W-2 position. An ideal program given the limited down payment but ability to handle the debt service; we helped orchestrate a gift on paper from the parents to show reserves.
- Owner-user commercial storefront purchase: $1.8M sale with an 80% loan. The buyer already owned another property in the immediate neighborhood.
As always, we look forward to answering your questions about potential financing and going over “what-if” scenarios.
From all of us at Centek Capital Group: Gloria, Curtis, Ted, Coby & Ben.