Bloomberg News reviews the increase in interest rate cap prices with Chris Moore
“Last year, it would be like buying flood insurance for your house in the mountains,” Chris Moore, a managing director at Chatham, said in a telephone interview. “This year, it's sort of like buying flood insurance for your house on the beach as a hurricane is making landfall.”Bloomberg News
Now that the Fed really is hiking, the cost of that protection has multiplied by 10 this year. For a $25 million mortgage, the cost was $535,000 in early May, compared with just $52,000 in January, for a two-year 2% rate cap, according to Chatham Financial Corp., a hedging advisory firm. Prices for the a similar three-year 2% cap rocketed up as much as 4,000%.
“Last year, it would be like buying flood insurance for your house in the mountains,” Chris Moore, a managing director at Chatham, said in a telephone interview. “This year, it's sort of like buying flood insurance for your house on the beach as a hurricane is making landfall.”
Interest rate risk management
Interest rate risk can be an important factor in the performance of a single real estate asset or a portfolio of properties. Chatham’s interest rate risk management advisory services offer the expertise and knowledge you need to make informed decisions about the type of debt you use and how you manage the interest rate risk associated with that debt, whether it’s risk on current floating rate debt, refinance risk on fixed rate debt, or risk on prepayment penalties.
With Chatham on your side, you can be confident that you’re getting the best possible terms, while maintaining the integrity of your all-important banking relationships. We provide complete guidance on strategy and execution, along with access to tools for monitoring the hedge for the life of the transaction.
Our highly experienced professionals, supported by industry-leading technology, ensure the best pricing, maximize transparency, and offer you insights into market trends.
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