Britain’s decision to exit the European Union sent shock waves across global financial markets, but in some ways, it's been a boon for multifamily borrowers.
Interest rates have dropped at least 50 basis points, on average, since the first quarter, with 10-year perm loans priced from 3.5% to 3.75%. What’s more, the uncertainty caused by Brexit has made U.S. real estate all the more attractive to foreign investors in search of a safe haven in which to park their capital.
Bad news from the global economy also pushed interest rates down for the safe, U.S. government bonds that are the benchmark for most long-term interest rates. “With any uncertainty and volatility in the world, everyone wants to plough money into our Treasuries,” says William Hughes, senior vice president for Marcus & Millichap Capital Corp.
… Investors also continue to pay high prices for apartment properties, thanks to low interest rates. “Many of these offerings have more than 30 bidders, which is incredible,” says Hughes. “With these renewed, low interest rates, they are willing to pay a higher price today than even ten days ago.”