Transcript Generated by AI 00:00 Hey, Mark Parkinson with Park Place and we're 00:02 back with another segment with EriK Howard from Capital Funding Group to talk 00:06 about what's happened with HUD interest rates. 00:08 Now, since the last time we talked with Erik, 00:10 a lot has happened in the world, including us being in a in a war in the 00:13 Middle East. 00:14 It feels like interest rates have spiked up. 00:17 And so I've been concerned that maybe they've spiked up for HUD loans. 00:20 So Erik, welcome back to Park Place and let's just 00:23 get right to it. 00:24 Have HUD loan rates spiked up? 00:28 Well, Mark, great. 00:29 Great to be back and I always appreciate the opportunity to talk with you and, 00:32 and folks in the sector. 00:34 Ironically, no. 00:35 While we've seen some volatility in, in HUD rates, 00:39 it hasn't been as amplified as what some of the market participants may have seen. 00:45 As an example, in the 10 year today, we're probably around 5. 00:49 50 or so if you were in a locker rate today and that's for delivery in a couple 00:53 months. 00:54 That's in contrast to what we saw on closings in March and April of probably 01:00 around 5. 40 and then a high level in in in January 01:03 of about 5.70. 01:04 So we remain in a band. 01:07 You go back even six months and while we were in the 5.60s, the 5. 01:11 50s again even despite that volatility that we've seen in the various markets 01:16 over the last couple months, HUD rates haven't really moved as much as 01:21 otherwise may have been considered or contemplated. 01:25 Well, I mean that's great news because I know 01:27 the 10 year treasury has has gone up quite a bit and I guess I was concerned 01:30 that that would have caused the HUD rate to go up, 01:32 but obviously that hasn't happened. 01:34 Yeah, I think that that's a macro theme Mark 01:36 that we've talked about is that there's a number of of factors that that go into 01:40 the HUD rates. 01:41 We talk about spreads from time to time and and to your point, 01:45 we saw the 10 year in February come down pretty pretty dramatically as a function 01:49 of volatility in the stock market. 01:52 Then from the beginning of March through today, 01:54 we've seen that volatility in the 10 year in particular as you've noted with the 01:59 the war on Iran and possible impacts in inflation and oil prices etcetera. 02:03 So there's always going to be that volatility and you know, we're, we're, 02:07 we're lucky that HUD rates can be muted from that from time to time. 02:11 And when you look back the last, you know, 20 or 30 years and certainly a longer 02:15 interest rate pattern than that, being able to lock in a non recourse loan 02:19 at 5.5, which is where the number is today is 02:22 pretty darn favorable. 02:24 Yeah, it's, it's absolutely, I mean, you've had some anomalies marker or we 02:29 have obviously, as, as we all recall in COVID when you had a 02:32 significantly depressed 10 year and corresponding HUD rates as well. 02:37 But look, we're, we're in an election year, as noted, 02:40 we've got a war going on in the Middle East. 02:43 We've got equity markets at their all time highs. 02:46 We've got discussion in and around the Fed. 02:48 We're always going to have volatility and we're always going to have possibilities 02:52 to see those gyrations. 02:53 With respect back to HUD rates and spreads come in, spreads go out. 02:57 So I think the theme as you've noted and you know I've talked about with this 03:01 group for many, many years is get your application in, 03:04 get your rate locked at 5.50 today. 03:06 Hopefully that number comes down and and I would advise owners and operators not 03:10 to try and time the market. 03:13 This is a great rate for a 30-35 year fixed deal. 03:16 There's a lot of flexibility around the ability to lower that in the out years 03:20 should rates come down. 03:22 And obviously it gives owners and operators great visibility on on such a 03:26 significant component of their expense base by by fixing that rate. 03:30 Yeah, well, I I certainly agree and it's very good 03:33 news because, you know, I've been concerned some others probably 03:36 had been that rates spiked up. 03:38 It's great that they haven't. 03:39 And no question about it, you can lock in non recourse financing 03:43 over a long period of time at 5.50. 03:46 It's a terrific situation. 03:47 So Erik, thanks again for joining us. 03:49 Thanks for this encouraging update. 03:51 Thanks for your support of the side and thanks to all of you for your continued 03:54 support of park flights.
