As we head towards the end of 3rd Quarter 2015, across all lending platforms we have experienced a widening in investor spreads for the past several months.
The chart below shows this relationship as it relates to HUD Multifamily Interest Rate Spreads.
As you can see the spread path has followed the benchmark yield (10-year treasury) during the Q1 and most of Q2. In June, the spreads deviated from the benchmark yield curve and continued to widen with the increased volatility in the global markets.
Borrowers need to understand that while there is constant movement in the benchmark yields, the interest rates/investor spreads do not always fall suit.
This is why it is important for borrowers to be realistic and ready to rate lock when their interest rate “strike price” is available, regardless of the benchmark yield price.
A good rate today can be gone tomorrow even with downward movement in the benchmark yield.