Category: Uncategorized

Heading into the home stretch of election season, right now it’s a toss-up. Whoever the eventual next President is, we all have our work cut out for us. The Federal Reserve lowered interest rates by .50% last month, but almost immediately, longer-term treasuries started a rapid ascent back toward previous levels. The 10-year treasury note has risen from 3.60% at the time of the cut to 4.25% today. This has had a dramatic effect on mortgage rates, which have risen approximately .375% to .625%, from the 5% range back into the 6% area.

We feel the Fed will continue to lower rates over the next year, but the effect of these cuts might be muted by the market. One reason is the overhanging level of government debt. Either candidate and eventual President will need to firmly embrace a more disciplined fiscal approach. On a more positive note, the economy continues to move forward: employment remains robust, inflation is coming down, and real estate values remain firm with a “normal” volume.

Our customized mortgage platforms can be a valuable assist in analyzing your current and projected real estate financing portfolio. We specialize in residential, commercial, apartment, and SBA financing at all price points and classes of properties. Centek can handle the most complex tax returns, and we are always pleased to run “what-if” scenarios with the “out of the box” thinking our clients expect.

A few important programs

• Non-occupant co-borrower concept offers great flexibility at all price points
• Only 1 year of tax returns accepted instead of the usual 2 (some programs)
• Asset depletion for qualifying in lieu of tax returns
• Wide array of interest-only programs for increased cash flow
• Deduct alimony from income rather than classifying it as a debt
• Bank-statement programs utilizing cash flow for qualifying
• Debt-Service Coverage Ratio (DSCR) loans on investment properties, qualifying based on rental income with no tax returns
• Reverse mortgages, an excellent vehicle for the right situation (both 1st and 2nd mortgages)
• Apartment and commercial loans tailored to specific needs

We always welcome your contact anytime!

This week’s Federal Reserve 50-basis-point robust cut sets the tone for lower mortgage rates. Chair Jerome Powell used the term “recalibrate” nine times during his Q&A after the cut. First and foremost, this cut had been telegraphed for some time and was already factored into the market. Mortgage rates roughly track the 10-year treasury note, which is outside the Fed’s direct control. In fact, rates worsened a small amount after the announcement. The good news is that rates have gradually declined over the past six weeks, and many products are sub-6%.

What should we do as borrowers? Understand the new mindset of the interest-rate complex: rates will slowly decline, manifesting with many small incremental ups and downs. It’s important to have loan packages completed and approved in order to take advantage of any dip. Any hint of inflation picking up will likely dampen short-term follow-through. As the cliché goes, “a bird in the hand is worth two in the bush.”

None of us has clear insight into where rates will be in the next 3 to 6 months. We strongly feel the important factor is being preemptive and ready to “pull the trigger” when appropriate. If rates move down more after we close, our company policy is to refinance at no cost to you. Historically, these concepts translate to increased real estate prices, further fueled by extreme amounts of liquidity waiting on the sidelines and tremendous pent-up demand.

Conforming loan limits

• 1 Unit: $802,650
• 2 Units: $1,027,750
• 3 Units: $1,242,250
• 4 Units: $1,543,900

With that said, stay tuned!

We wanted to reach out with a quick update on the interest-rate environment. Today’s employment report reflects a demonstrable slowdown in new job creation. The market is now fearful of a full-fledged recession vs. a “soft landing.” As a result, the equity markets are getting beaten down substantially, and money is leaving equities for the bond market. Treasury yields are falling dramatically, with the 10-year yielding 3.82% as of this morning. To put that in perspective, the closing yield last Friday was 4.18%. A rate drop of this size is a big deal.

The benefactor of the lower treasury yields will be the mortgage market. We expect to see rates start falling into the high 5% range in the next week or so. Our recommendation is to reach out so we can review your current mortgage and analyze any potential savings from refinancing to a lower rate or changing amortization terms from a 30-year loan to a 15- or 20-year loan. Also, be cognizant of any hybrid loan that might be adjusting in the next year. This could be an advantageous time to switch to a longer-term vehicle for more stable, predictable payments.

As always, we appreciate your contact and are always pleased to run “what-if” scenarios. Thank you from all of us at Centek Capital!

A quick update for the summer real estate sales market, which is slightly slower, but prices remain resilient with a few areas experiencing slight declines. We feel many of the price reductions are due to overly aggressive listing prices compared to current comparables. After no movement, reality eventually sets in and the price is reduced.

We feel the market is taking a pause, waiting for interest rates to drift lower, encouraged by Fed-speak and the upcoming election. When rates retrace into the high 5% area, we feel this will open the market quite a bit at all price points. Current mortgage rates have been stagnant in the mid-6% range for some time. We have seen a slight reduction with alternative-qualifying (Non-QM) products, which give tremendous flexibility to self-employed borrowers rather than traditional tax-return qualifying.

Important concept: our 2nd-TD reverse mortgage product allows the property owner to retain their low-interest first mortgage and obtain a reverse mortgage with cash-out for liquidity. Payments are not made on this loan; interest accrues to the balance. It is an excellent vehicle for borrowers considering selling within a three-to-five-year time frame, with no prepayment penalty.

In the commercial / apartment loan space, we have some aggressively priced lenders, but underwriting is extremely rigid across the board, with escrows usually 45 to 60 days. If you have an adjustable commercial or apartment loan that is rolling to market or maturing, give yourself 90 days before any maturity or adjustment to obtain a new loan. Our pre-approval and approval letters are well received in the industry, and our clients frequently prevail based on our established name.

We welcome your contact anytime. From all of us at Centek, have an enjoyable summer. Stay tuned!

Hard to imagine that graduation events are behind us and summer holiday plans are in full swing for so many. The overall significant element for the country is that the US economy keeps chugging along!! Even though economists can interpret minor signs of the economy slowing, the macro picture remains broadly positive. The elephant in the room is when will Chairman Powell and the Federal Reserve feel comfortable enough to start reducing for this year… Our feeling is that the Fed wants to cut rates, but pulling the trigger requires a bit more quantifiable economic information such as weaker employment and declining retail and housing sales helping move the needle down closer to the Fed’s projected inflation target rate in the low 2’s. We’ve experienced record-breaking tightening cycles in the last two years which have been a reality shock financially for many, especially the broad-based middle class. Our read is that even if inflation stays in its current range, a weak employment report in July might be enough of a catalyst to encourage the first rate cut after all the rate increases.

Let’s not minimize the November Elections and the inherent long-term effects on economic and tax policy in the next couple of years. This statement obviously has important ramifications.

The real estate market has remained buoyant throughout the first half of the year. Purchase volume is considerably less after the initial thrust at the beginning of the year when mortgage rates were in the high 5% area for a short period of time. Important—-There is still a fair amount of activity and prices have remained sticky with minimal price retraction. Rates have been slowly declining, and we are hopeful that with a Fed rate cut within the next month or two, rates will migrate back into the high 5% range. Rates in this area should create a stronger demand in the purchase market. There is a tremendous amount of pent-up demand at all price points that have been affected to a large degree (with golden handcuffs of property owners having rates in the 2’s & 3’s). These low interest rates and low payments have not encouraged the move-up buyers to stimulate the market, which historically is important. New household formation currently is the major source of buyer activity.

Brief update on certain lending areas that are important to the marketplace:

• 80% LTV up to $5,000,000
• 85% LTV up to $2,500,000
• 90% LTV up to $2,000,000.
• 96.5% LTV up to $1,149,825
• Conventional loan amount for 2-4 Units have also expanded:
• Up to $2,163,000 Loan for a 4 Unit property
• Up to $1,741,000 for a 3 Unit property
• Up to $1,440,450 for 2 Unit Property

With the conventional loans, the underwriting is sometimes less restrictive and can help save a transaction. We also have a wide array of Reverse Mortgage products which have become much more user friendly. One product in particular is a 2nd Mortgage at 9.99% with no prepayment penalty. This is an excellent vehicle for retirement age clients or borrowers seeking to raise additional cash without monthly payments (Interest accrues to the principle). This can be ideal for someone who is considering selling their house within the next 5 years.

Many clients have reached out as a result of their interest only fixed period of time adjusting to a new principal and interest payment with a 23 Year or less amortization. Needless to say, payment shock is an understatement.

Important, we are very knowledgeable in the Commercial and Apartment loan area and many of our borrowers have loans adjusting and/or maturing.

We feel that now is an important time to position Real Estate activity for year-end interest rate cuts which historically fuel the purchase market and the resulting increase in prices.

Stay Tuned!!

Personal Regards,
Gloria Shulman, Curtis Cohen, Ted, Coby , David, Ben and All of us at Centek

In the last two days we have experienced some downward movement with Interest Rates. The overall feeling is the Fed will lower rates very guardedly with the emphasis being watching for any type of pickup with inflation. So far, the Fed has been very diligent, but it is a tightrope walk with balancing inflation versus slower economic growth.

One thing is for certain…time marches on! We have all have experienced a wide range of different opinions regarding the economy, real estate, world politics, the upcoming elections etc… In addition, we can all draw upon historical personal perspectives and long-term economic cycles, but want to share something we read a few days ago that resonates with our Real Estate industry at all price points.

“In 1971, the interest rate for a residential mortgage (nationwide) was 7.33%. If one waited for interest rates to track down significantly, the chances are one wouldn’t have purchased a home until 1993. This concept extrapolates that one would have rented for 22 years waiting for rates to go down, while in the meantime the value of real estate quadrupled. We think the mantra is—Don’t wait for the market to cycle and reach for a “bottom” in rates. The cliche is, “Marry the house, date the rate.”

Important to filter into your thought process–When rates move down there is tremendous amount of pent up demand from buyers at all price points who will compete for existing home products. Historically this means an increase in sale prices. In addition there is a tremendous amount of liquidity waiting on the sidelines to place in Real Estate vehicles. Most of us would like a mortgage in the 3%-4% range which we all became used to in the last few years. That being said, we live in a fluid real time continuum and need to position ourselves in the here and now—Assuming one has the ability to step up to the plate. Don’t procrastinate and wait for a lower rate which may or may not occur. Be realistic with what one can afford and what one can’t. If prices are too high in a certain area, we suggest one branches out and expand the parameters into different markets that one would be willing to entertain. The bottom line is we all need to be realists and temper expectations based on what one can afford and what one can’t. None of us need additional stress in our lives.

Important, there are a number of alternative loan programs for qualifying purposes in addition to the traditional mortgage platforms. These programs are created to help the self-employed qualify. It is now possible to qualify for a transaction based on cash flow from bank statements, rental income or additional strength provided by a non-occupant co-borrower. Please reach out so we can review in detail & run some numbers with you.

In addition, many of our commercial real estate clients have been discussing with us their current mortgage is either rolling after the initial fixed rate period or maturing. The environment is quite challenging at the moment and we are assisting clients with deal restructuring and advising on how to retain properties. At the end of the day, do not wait until 60 days before an event. Give yourself four to six months to work on this in order for us to find a new lender or work with the existing lender on your behalf.

Once again, we are always here for you and welcome your contact anytime!

Stay Tuned!

Personal Regards,
Gloria, Curtis, Ted, Coby, David, Ben and All of us at Centek Capital Group