Transcript Generated by AI 00:00 Hey Mark Parkinson back with Park Place and we're here with Eric Howard for our 00:05 very first HUD Rate watch segment. 00:08 Our our plan is to every month talk to Eric and get all the information about 00:13 what the average rate for HUD loans closing has been in the prior month so 00:18 that you can have the freshest up to So Eric, thanks a bunch for, of course, 00:24 you know, first of all sponsoring this segment and 00:27 thanks for having us being involved with the sector and giving us this data. 00:33 Great. 00:33 You've, you've heard me say many times, I think that for most providers, 00:37 once they get their building stabilized, they really need to get the HUD. 00:40 Absolutely. 00:41 Key thing I followed every month when Stacey and I was operating was, you know, 00:44 where, where are the rates at right now? 00:46 I mean, it's, it's incredible. 00:48 A1 or 2% change in interest rates can be massive to a building. 00:52 Absolutely. 00:53 I mean, I remember one year we refined our debt 00:56 from 9.75 to 7.5. 00:58 This is back when rates were a lot higher, big deal. 01:00 We made more money on our refinance than we made in our entire nursing home 01:04 operation. 01:05 So these rates are, well, in particular markets, as you know, 01:08 and the operators do, it's a nickel and dime business. 01:10 And when margins are so thin and, and, and when you need to make sure you're 01:14 preserving every nickel, that's a great way to do it. 01:17 Yeah. 01:17 So every month you're going to compile the data for us. 01:20 We'll have a segment, we'll publicize the number so people can 01:22 come to the website and see what the number is, of course. 01:25 So it sounds like all of the you have access to all the data of all the 01:28 headlines that have closed. 01:29 We do, absolutely. 01:30 That's terrific. 01:31 So as we sit here today in September of 2025 and you look at the most recent data, 01:35 what, what's the percentage rate right now? 01:37 Where are loans closing? 01:39 So as we come into September, rates are probably around 5:50 today, 01:43 maybe 560. 01:44 Obviously some volatility with the 10 year, 01:47 which is the primary debt instrument by which HUD rates are based. 01:52 And so there's two really main components that the movement of the 10 year and that 01:55 we refer to as spreads. 01:57 HUD rates trade usually as a, as a percentage over or basis points over 02:03 that treasury. 02:04 So you've got 2 variables that really drive that rate. 02:06 So it's a 550. 02:07 Is that the all in rate? 02:08 Because I that is, that's the rate before you pay mortgage 02:11 insurance. 02:11 OK. 02:12 So that's what we refer to as the note rate. 02:14 And So what would the all in rate be? 02:16 So the rate today would be just in the low sixes. 02:18 When you factor in the mortgage insurance premium that's, you know, 02:21 considering everything that's going on with rates, that's a pretty good rate. 02:24 It is. 02:25 And so when you contrast that really quickly Mark to what as an example bridge 02:29 financing would be, which is is usually based off what we 02:33 refer to as Sofer SOFA is about 4:30 today ish. 02:35 And while there's expectations that may go lower, 02:38 that's effectively a Sofer 200 basis point rate, 02:41 which is it's pretty darn good from a HUD perspective. 02:45 Yeah, there's a lot of speculation that the Fed 02:47 could lower rates. 02:48 I think the markets are pricing in maybe a couple cuts. 02:50 They are by the end of the year 2020, five, 80% cut by the end of the year. 02:54 What do you what will that do if there's any way to tell or know to HUD rate? 02:58 So when we saw it in the end of August, Chairman Powell for the Federal Reserve 03:03 indicate that the Fed may change its its position with respect to rates. 03:08 When they refer to that, it's on what we refer to as the short end 03:11 of the curve, which is really so for or Fed funds rates, 03:15 that's the rate that really impacts the sector participants and their bridge 03:19 financing with commercial commercial banks. 03:22 When that happened, the 10 year did react and the 10 year 03:26 came down because the market's a discounting mechanism effectively. 03:29 So by the Fed signaling that they effectively said we've been concerned 03:33 about inflation for years now, we may be focused a little bit more on 03:37 unemployment and maybe some softness there. 03:40 And so the market reacts to that and the 10 year reacts to that. 03:43 So the, the Fed could change, rates could come down and while the 10 03:48 year reacted, not a certainty that it's going to 03:51 continue to fall. 03:52 So there there are other factors that impact that that could drive it higher. 03:55 Even still. 03:56 I mean, we may have already seen the benefit of 03:58 the Fed cut, even though the Fed hasn't cut yet. 04:00 And and that's the market is highly efficient. 04:03 I mean, there's a lot of smart folks that are 04:05 bond traders and you know, we've talked about and I've told many of 04:08 my clients over the years that we're not bond traders. 04:11 And when you can get a rate all in with MIP at 6:15, 04:14 that's a pretty good rate in particular given the optionality to lower that if 04:18 rates go lower. 04:19 Yeah, I agree. 04:20 Because if if you're if, if rates go way up, 04:22 if they go to seven or eight, you're looking pretty darn. 04:25 If they go down to 3 or 4, you can just reprice it. 04:28 Yeah, absolutely. 04:29 I don't know why folks aren't walking in. 04:30 Well, Eric, Eric, thanks a bunch, of course, for this information. 04:33 And we'll come back next month again. 04:35 We'll have a monthly segment telling you exactly where rates are AT and hopefully 04:39 help you make some decisions about your long term financing. 04:42 Until then, thank you very much for joining Park 04:44 Place. 04:46 Oh my God, if you're still watching this, this means that you watch the end of a 04:50 very long video on Park Place. 04:53 I'm not sure what that means. 04:54 It says something about you or maybe there was just nothing else to watch 04:58 today, or maybe your priorities are a little bit 05:00 off. 05:00 But whatever it is, we really appreciate your support. 05:03 And if you want to continue to follow us, follow us on LinkedIn and our various 05:08 social media sites and, you know, try to find something else to do.
