fixed rate – Flight 93 http://flight93.org/ Sat, 19 Mar 2022 17:14:12 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://flight93.org/wp-content/uploads/2021/07/icon-5-150x150.png fixed rate – Flight 93 http://flight93.org/ 32 32 How the Fed’s Interest Rate Hike Affects Buyers and Homeowners https://flight93.org/how-the-feds-interest-rate-hike-affects-buyers-and-homeowners/ Sat, 19 Mar 2022 16:27:43 +0000 https://flight93.org/how-the-feds-interest-rate-hike-affects-buyers-and-homeowners/ (NerdWallet) – The Federal Reserve raised a fundamental interest rate on Wednesday. As a result, mortgage interest rates will likely rise, and home equity line of credit rates will certainly rise. The Fed raised its federal funds rate target by 0.25%, or a quarter of a percentage point. Other interest rates are built on top […]]]>

(NerdWallet) – The Federal Reserve raised a fundamental interest rate on Wednesday. As a result, mortgage interest rates will likely rise, and home equity line of credit rates will certainly rise.

The Fed raised its federal funds rate target by 0.25%, or a quarter of a percentage point. Other interest rates are built on top of the federal funds rate, including the prime rate often applied to business loans by major banks. It too will increase by 0.25%.

Fed interest rates are rising as an inflation-fighting measure.

“It is our duty to bring inflation down to 2%,” Fed Chairman Jerome Powell said at a press conference after policymakers met in January.

With inflation well above the central bank’s target, the Fed is expected to raise the fed funds rate several times this year. The rate started the year near 0%, and fed funds futures traders are betting it will end the year above 1.5%, according to the CME futures market tool FedWatch.

How the Fed’s rate hike affects home buyers

Mortgage rates are likely to rise because they tend to move in the same direction as the fed funds rate. With the expected increases, mortgage rates could trend higher all year.

If you’ve ever signed a contract to buy a house and locked in an interest rate, you’re in good shape. The lender cannot raise your rate.

But if you’re shopping for a home or planning until this year, mortgage interest rates could be higher by the time you get an accepted offer to buy. You can’t lock in an interest rate until you sign a contract to buy a house.

If mortgage rates rise significantly before you find a home, you might end up shopping at a lower price range. Indeed, higher interest rates weaken your purchasing power.

How much can you borrow for $1,500 per month (principal and interest)

Interest rate Amount of the loan
4% $314,200
4.5% $296,000
Difference $18,200

Don’t rush to buy just because mortgage rates are rising, warned Robert Heck, vice president of mortgages for online mortgage broker Morty. Rates, he said over email, shouldn’t be “the sole driving force in whether someone should buy a home right now.” Of course, rates play into the decision, but personal and financial factors are paramount.

How the Fed’s rate hike affects mortgage refinancers

With rising interest rates, fewer homeowners will have the ability to refinance at a lower interest rate to lower their monthly payments.

But not everyone refinances to reduce their monthly payments. Many people choose cash-out refinancing: they refinance more than they owe and take the difference in cash. This money can be spent on renovations, debt consolidation, tuition or other things.

Rising interest rates could reduce the loan amounts refinancers can afford, as higher interest rates mean higher monthly payments.

A home equity line of credit is an alternative to cash refinances, but HELOC rates will rise this year. The same is likely to happen for fixed rate home loans.

How the Fed’s rate hike affects homeowners with HELOCs

The interest rate on a home equity line of credit, or HELOC, increases each time the Federal Reserve raises the federal funds rate, and by the same amount. So when the Fed raises the fed funds rate by a quarter of a percentage point, the rate on a HELOC will follow within a billing cycle or two.

HELOC rates are pegged to the prime rate, which is pegged to the federal funds rate. On a HELOC balance of $50,000, a 0.25% increase in interest rate means about a $10.42 increase in monthly interest.

Interest rates on cash refinance, HELOC loans and home equity loans tend to be lower than rates on credit cards and personal loans, said Rob Cook, vice president of marketing, digital. and analysis for Discover Home Loans, via email. “That means leveraging the equity in your home will continue to be a compelling option even as rates go up,” he said.

How the Fed’s rate hike affects door-to-door sellers

If you’re selling your home, you probably take offers more seriously when they come from buyers who have been pre-approved for a mortgage. But to be confident in a buyer’s ability to afford your home, make sure pre-approval is based on current interest rates.

Why? Buyers pre-approved at yesterday’s lower rates may no longer qualify for the same loan amount at today’s higher rates. So if you accept an offer from a buyer who ultimately fails to qualify for a mortgage, you’ll lose valuable time.

If interest rates rise significantly, you could end up selling to someone in a higher income bracket than you originally marketed your home to.

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What is Deferred Financing for Cash Buyers? https://flight93.org/what-is-deferred-financing-for-cash-buyers/ Fri, 18 Mar 2022 14:50:52 +0000 https://flight93.org/what-is-deferred-financing-for-cash-buyers/ Why go into debt when your house is paid off? While it’s always attractive to pay off debt and keep it, mortgage debt is often considered good debt because, over time, it can increase your wealth. Low interest rates Today’s mortgage rates at the time of writing this report sit at just over 4% for […]]]>

Why go into debt when your house is paid off?

While it’s always attractive to pay off debt and keep it, mortgage debt is often considered good debt because, over time, it can increase your wealth.

Low interest rates

Today’s mortgage rates at the time of writing this report sit at just over 4% for a 30-year fixed rate mortgage. In contrast, 20 years ago, the best rate you could have gotten would have been just under 7%.

In this low interest rate environment, doesn’t it make sense to get most of your money back, get a mortgage to buy your house, and find another use for your savings? How about investing that money? What if you had major renovations in mind for your new home?

Create credit

It may seem counterintuitive, but having no debt is not the key to being a good credit risk. In fact, it’s probably going to hurt you when it comes time to get a mortgage.

By having mortgage debt and paying it off faithfully and on time, you are building a favorable credit history. In the future, when you need a loan, it will be available to you, and at the lowest possible rates.

It is important to note that it will be helpful to have a pre-existing credit history with credit cards, personal, student or auto loans before getting a mortgage. Your home loan is just one more thing that helps add to your story.

Use of credit

Having a solid debt repayment history is just one factor lenders look at when assessing your creditworthiness. Another factor they take into account is your credit utilization rate, which is the amount of credit you are actually using at any given time. Lenders like to see that you know how to manage your credit.

Cash or cash available to invest

If you are an investor or would like to become one, you know the importance of having cash on hand. Although mortgage rates are low and the stock market and real estate investments offer the potential for high returns, it makes more sense to get your money out of your home and use it to build your investment portfolio.

When considering an investment strategy, be sure to assess your risk tolerance and balance your portfolio periodically to mitigate risk.

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Today’s mortgage rates are lower | March 7, 2022 https://flight93.org/todays-mortgage-rates-are-lower-march-7-2022/ Mon, 07 Mar 2022 13:27:26 +0000 https://flight93.org/todays-mortgage-rates-are-lower-march-7-2022/ Average mortgage rates are lower today for all loan categories. Homebuyers looking for a 30-year fixed rate mortgage will find average rates of 4.387%, down 0.144 percentage points from the end of last week. Refinancers can also take advantage of lower rates. Expect to see an average rate of 4.467% for a 30-year refi. The […]]]>

Average mortgage rates are lower today for all loan categories.

Homebuyers looking for a 30-year fixed rate mortgage will find average rates of 4.387%, down 0.144 percentage points from the end of last week. Refinancers can also take advantage of lower rates. Expect to see an average rate of 4.467% for a 30-year refi.

  • The last rate on a 30-year fixed rate mortgage is 4.387%. ⇓
  • The last rate on a 15-year fixed rate mortgage is 3.362%. ⇓
  • The last rate on a 5/1 ARM is 3.105%. ⇓
  • The latest rate on a 7/1 ARM is 3.378%. ⇓
  • The latest rate on a 10/1 ARM is 3.458%. ⇓

Money’s daily mortgage rates reflect what a borrower with a 20% down payment and a credit score of 700 — roughly the national average score — could pay if he or she applied for a home loan right now. Each day’s rates are based on the average rate that 8,000 lenders offered applicants the previous business day. Freddie Mac weekly rates will generally be lower, as they measure the rates offered to borrowers with higher credit scores.

Are you looking for a loan? Check out Money’s lists of top mortgage lenders and top refinance lenders.

Today’s 30-Year Fixed Rate Mortgage Rates

  • The 30-year rate is 4.387%.
  • It’s a day offold by 0.144 percentage points.
  • It’s a month to augment by 0.171 percentage points.

Predictable and relatively low interest rates make the 30-year fixed rate mortgage the most popular home loan in America. The long repayment period makes monthly payments on a 30-year loan more affordable than on a shorter-term loan. On the other hand, the overall cost will be higher because you will be paying a higher interest rate for longer.

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Average mortgage rates

Data based on US mortgages closed March 4, 2022

Type of loan March 4 Last week Change
15-year fixed conventional 3.36% 3.53% 0.17%
30-year fixed conventional 4.39% 4.49% 0.1%
ARM rate 7/1 3.38% 3.52% 0.14%
ARM rate 10/1 3.46% 3.64% 0.18%

Your actual rate may vary

15 years today fixed rate mortgage rates

  • The rate over 15 years is 3.362%.
  • It’s a day offold by 0.132 percentage points.
  • It’s a month infold by 0.136 percentage points.

The 15-year fixed rate loan will have a lower interest rate than a 30-year loan, which means you will have lower total costs over time. However, since you have to pay off the loan faster, the monthly payments will be higher and may not suit all budgets.

Use a mortgage calculator to determine which option is best for you.

The latest rates of adjustable rate mortgages

  • The last rate on a 5/1 ARM is 3.105%. ⇓
  • The latest rate on a 7/1 ARM is 3.378%. ⇓
  • The latest rate on a 10/1 ARM is 3.458%. ⇓

Variable rate mortgages will start with an initial fixed interest rate before the rate begins to adjust at set intervals. The rate on a 5/1 ARM, for example, is fixed for five years and then adjusts once a year. Although the initial rate tends to be quite low, it could increase significantly after the fixed period ends.

The Latest VA, FHA, and Jumbo Loan Rates

The average rates for FHA, VA, and jumbo loans are:

  • The rate on a 30-year FHA mortgage is 4.099%. ⇓
  • The rate for a 30-year VA mortgage is 4.517%. ⇓
  • The rate for a 30-year jumbo mortgage is 3.853%. ⇓

The latest mortgage refinance rates

The average refinance rates for 30-year loans, 15-year loans and ARMs are:

  • The refinance rate on a 30-year fixed rate refinance is 4.467%. ⇓
  • The refinance rate on a 15-year fixed rate refinance is 3.433%. ⇓
  • The rollover rate on a 5/1 ARM is 3.154%. ⇓
  • The refinance rate on a 7/1 ARM is 3.426%. ⇓
  • The refinance rate on a 10/1 ARM is 3.514%. ⇓
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Average Mortgage Refinance Rates

Data based on US mortgages closed March 4, 2022

Type of loan March 4 Last week Change
15-year fixed conventional 3.43% 3.62% 0.19%
30-year fixed conventional 4.47% 4.57% 0.1%
ARM rate 7/1 3.43% 3.59% 0.16%
ARM rate 10/1 3.51% 3.72% 0.21%

Your actual rate may vary

Where are mortgage rates going this year?

Mortgage rates have fallen through 2020. Millions of homeowners have responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people bought homes they might not have been able to afford if rates were higher. In January 2021, rates briefly fell to lowest levels on record, but rose slightly for the rest of the year.

Looking ahead, experts believe that interest rates will rise further in 2022, but also modestly. Factors that could affect rates include continued economic improvement and further labor market gains. The Federal Reserve has also started to scale back its purchases of mortgage-backed securities and said it plans to raise the federal funds rate three times in 2022 to combat rising inflation from March.

While mortgage rates are likely to rise, experts say the increase won’t happen overnight and it won’t be a dramatic jump. Rates are expected to remain near historic lows throughout the first half of the year, rising slightly later in the year. Even with rising rates, it will still be a good time to finance a new home or refinance a mortgage.

Factors that influence mortgage rates include:

  • The Federal Reserve. The Fed acted quickly when the pandemic hit the United States in March 2020. The Fed announced its intention to keep money flowing in the economy by lowering the Federal Fund short-term interest rate between 0% and 0.25%, which is also low as you go. The central bank also pledged to buy mortgage-backed securities and treasury bills, supporting the housing finance market, but began to scale back those purchases in November.
  • The 10-year Treasury bond. Mortgage rates keep pace with government 10-year Treasury bond yields. Yields first fell below 1% in March 2020 and have since risen. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
  • The wider economy. Unemployment rates and changes in gross domestic product are important indicators of the overall health of the economy. When employment and GDP growth are weak, it means the economy is weak, which can lower interest rates. Thanks to the pandemic, unemployment levels reached historic highs early last year and have yet to recover. GDP has also taken a hit, and although it has rebounded somewhat, there is still plenty of room for improvement.

Tips for getting the lowest possible mortgage rate

There is no universal mortgage rate that all borrowers receive. Qualifying for the lowest mortgage rates takes some work and will depend on both personal financial factors and market conditions.

Check your credit score and your credit report. Mistakes or other red flags can lower your credit score. Borrowers with the highest credit scores are the ones who will get the best rates, so it’s essential to check your credit report before you begin the home hunting process. Taking steps to correct mistakes will help increase your score. If you have high credit card balances, paying them off can also give you a quick boost.

Save money for a large down payment. This will lower your loan-to-value ratio, which is the share of the house price that the lender has to finance. A lower LTV usually translates to a lower mortgage rate. Lenders also like to see money that has been saved in an account for at least 60 days. It tells the lender that you have the money to finance the home purchase.

Shop around for the best rate. Don’t settle for the first interest rate a lender offers you. Check with at least three different lenders to see who offers the lowest interest rate. Also consider different types of lenders, such as credit unions and online lenders in addition to traditional banks.

Also, take the time to learn about the different types of loans. Although the 30-year fixed rate mortgage is the most common type of mortgage, consider a shorter-term loan such as a 15-year mortgage or an adjustable rate mortgage. These types of loans often come with a lower rate than a conventional 30-year mortgage. Compare the costs of all to see which best suits your needs and financial situation. Government loans — such as those backed by the Federal Housing Authority, Department of Veterans Affairs, and Department of Agriculture — may be more affordable options for those who qualify.

Finally, lock in your rate. Locking in your rate once you’ve found the right rate, the right loan product, and the right lender will help ensure that your mortgage rate doesn’t increase until the loan is closed.

Our mortgage rate methodology

Money’s Daily Mortgage Rates show the average rate offered by more than 8,000 lenders across the United States for which the most recent rates are available. Today we are posting rates for Friday, March 4, 2022. Our rates reflect what a typical borrower with a credit score of 700 might expect to pay for a home loan right now. These rates were offered to people depositing 20% ​​deposit and include discount points.

More money :

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Mortgagees continue to switch lenders en masse https://flight93.org/mortgagees-continue-to-switch-lenders-en-masse/ Sun, 06 Mar 2022 21:20:52 +0000 https://flight93.org/mortgagees-continue-to-switch-lenders-en-masse/ New figures released by the Australian Bureau of Statistics (ABS) show that homeowners with mortgages still seem to be making the most of relatively competitive interest rates by switching their loans in considerable numbers. Released as part of the ABS’s latest Lending Indicators release, the figures reveal that $14.3 billion in home loans were refinanced […]]]>

New figures released by the Australian Bureau of Statistics (ABS) show that homeowners with mortgages still seem to be making the most of relatively competitive interest rates by switching their loans in considerable numbers.

Released as part of the ABS’s latest Lending Indicators release, the figures reveal that $14.3 billion in home loans were refinanced with a new lender during the month of January – $9.2 billion from homeowners and $5.1 billion from investors.

While that total figure of $14 billion was actually down month-over-month, the ABS noted that the amount of refinancing undertaken was still 18.7% higher than in the same period in 2021.

In fact, the January total is the ninth-highest month on record for the ABS since it began tracking rollover data in 2004.

January 2022 external refinancing values ​​(seasonally adjusted). Source: abs

Is changing credit worth it?

Given that $14 billion in home loans were refinanced in January and a record $181 billion was transferred over all of 2021, some borrowers may be wondering, “Why didn’t I refinanced my own home loan?” and “Is it worth changing?”.

Deciding whether or not to refinance is unlikely to be a simple yes or no decision, as there are a number of factors that can determine whether it is worth it, or even possible.

For example, some mortgage holders will not be able to refinance with another lender if their loan-to-value ratio is above 80%. It also might not make financial sense for those who are currently locked into a fixed rate with substantial breakage fees, or for anyone who already enjoys a competitive rate.

If you’re able to refinance at a lower rate, it could be worth it considering the potential savings on offer – both in terms of money saved on monthly repayments and in total interest over the life of the loan.

Here is an example using the current average homeowner loan amount ($618,729) in Australia being repaid over a 20-year period with principal and interest repayments.

Monthly repayments Total interest
2.00% $3,130 $132,482
2.50% $3,279 $168,150
3.00% $3,431 $204,820
3.50% $3,588 $242,482
4.00% $3,749 $281,121
4.50% $3,914 $320,723

This is just a typical range of home loan rates available today, and it’s safe to say that over a 20-year period, any mortgage holder’s rate will generally fluctuate quite a bit. The takeaway, however, remains the same: a lower interest rate could help reduce the cost of the loan significantly over time.

RELATED: Many lenders offer $3,000 cash back to refinance your home loan

Want to know how much you could potentially save by switching loans? Make your life easier by taking our change and savings calculator for a spin, or familiarize yourself with a range of refinance offers by heading to Mozo’s dedicated refinance home loan comparison table.

* ATTENTION: This comparison rate only applies to the example or examples given. Different amounts and durations will result in different comparison rates. Costs such as withdrawal charges or prepayment charges, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate shown is for a secured loan with monthly principal and interest repayments of $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges, and therefore the total cost of the loan, may vary depending on your loan amount, loan term and your credit history. Actual repayments will depend on your personal circumstances and changes in interest rates.

^ See Mozo Experts Choice Home Loan Awards information

Mozo provides general product information. We do not take into account your personal goals, financial situation or needs and we do not recommend any particular product. You must make your own decision after reading the PDS or offering literature, or after seeking independent advice.

Although we pride ourselves on covering a wide range of products, we do not cover every product on the market. If you choose to request a product through our website, you will be dealing directly with the supplier of that product and not with Mozo.

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Is it good for you ? https://flight93.org/is-it-good-for-you/ Wed, 02 Mar 2022 23:00:35 +0000 https://flight93.org/is-it-good-for-you/ Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We earn commission from affiliate partners on many offers, but not all offers on Select are from affiliate partners. Personal loans have become a popular option for covering a variety of major expenses, such as […]]]>

Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We earn commission from affiliate partners on many offers, but not all offers on Select are from affiliate partners.

Personal loans have become a popular option for covering a variety of major expenses, such as home renovations, weddings, unexpected expenses, funerals and more. In some cases, it may actually be more affordable to use a personal loan than to use a credit card, as personal loans generally carry lower interest rates.

It’s even better when a personal loan, like American Express® Personal Loans, do not charge application fees or set-up fees. American Express is also one of the few big names in banking to offer personal loan products to everyday customers.

Of course, however, you should always do your research before applying for any financial product and ensure that you are comfortable with the terms of that product before signing on the dotted line.

To help you out, Select has looked at Amex’s APR, benefits, fees, loan amounts and terms. (Learn more about our methodology below.) Read on to find out if American Express is the right lender for you.

American Express Personal Loan Review

American Express® Personal Loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, home improvement, moving expenses, wedding or vacation

  • Loan amounts

  • terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

Benefits

  • No setup fees, no prepayment fees
  • Same day decision in seconds (in most cases)
  • Ability to pay creditors directly
  • Funds can be disbursed by direct deposit

The inconvenients

  • $39 late fee
  • No automatic payment discount
  • No co-signers or joint applications
  • Only American Express cardholders can apply
  • The payment due date cannot be changed
  • Funds cannot be used to pay American Express credit cards

APR

APRs range from 6.91% to 19.97% for American Express Personal Loans. Unlike most other personal lenders, American Express does not offer interest rate discounts for making payments using autopay (typically a 0.25% discount is applied for signing up so that your payments are automatically applied to your balance).

The APR range for these personal loans is a bit higher than some other lenders, but Amex personal loans carry fixed interest rates that won’t fluctuate for the life of your loan. Also keep in mind that generally the higher your credit score, the lower your interest rate is likely to be. American Express does not disclose the exact minimum credit score required to qualify for its personal loan products.

Benefits

Costs

Amount of the loan

Mandate’s duration

Applicants can choose from terms ranging from 12 to 36 months.

At the end of the line

American Express® Personal Loans are a great, simple option for those who are already American Express Card members and familiar with the company’s products.

Some lenders charge a penalty for prepaying your personal loan because it means they would miss these interest charges, but American Express allows you to avoid these charges.

If you’re looking for slightly lower interest rates and the chance to get an Autopay rebate, check out LightStream Personal Loanswhich offers this 0.25% APR deduction for the automatic payment of your bill each month.

And if you need a personal loan under $3,500, there are other options like PenFed Personal Loanswhich start at just $600.

Our methodology

To determine which personal loans are the best, Select has analyzed dozens of U.S. personal loans offered by online and physical banks, including major credit unions, that have no origination or enrollment fees, fixed-rate APRs, and loan amounts and terms. flexible to meet a range of funding needs.

When selecting and ranking the best personal loans, we focused on the following characteristics:

  • No creation or registration fees: None of the lenders on our top list charge borrowers an upfront fee for processing your loan.
  • Fixed APR: Variable rates can go up and down over the life of your loan. With a fixed-rate APR, you fix an interest rate for the life of the loan, which means your monthly payment won’t vary, making it easier to plan your budget.
  • Flexible minimum and maximum loan amounts/terms: Each lender offers a variety of financing options that you can customize based on your monthly budget and how long you need to pay off your loan.
  • No prepayment penalties: The lenders on our list do not charge borrowers for prepaying loans.
  • Simplified application process: We looked at whether lenders offered same-day approval decisions and a fast online application process.
  • Customer service: Every loan on our list offers customer service available by phone, email or secure online messaging. We have also opted for lenders that have a resource center or an online advice center to help you learn about the personal loan process and your finances.
  • Disbursement of funds: The loans on our list provide funds quickly by electronic transfer to your checking account or in the form of a paper check. Some lenders (which we have noted) offer the option of paying your creditors directly.
  • Automatic payment discounts: We’ve noted lenders who reward you for signing up for autopay by reducing your APR by 0.25% to 0.5%.
  • Creditor Payment Limits and Loan Sizes: The lenders above offer loans of varying sizes, ranging from $500 to $100,000. Each lender advertises their respective payment limits and loan amounts, and completing a pre-approval process can give you an idea of ​​what your interest rate and monthly payment would be for such an amount.

After reviewing the features above, we’ve sorted our recommendations based on overall financing needs, debt consolidation and refinance, small loans, and overnight financing.

Note that advertised rates and fee structures for personal loans are subject to fluctuation in accordance with the Fed rate. However, once you have accepted your loan agreement, a fixed rate APR will guarantee the interest rate and the monthly payment will remain constant for the duration of the loan. Your APR, monthly payment, and loan amount depend on your credit history and creditworthiness. To take out a loan, lenders will do a credit check and ask for a full application, which may require proof of income, identity verification, proof of address and more.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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ABC raises fixed rates for second time in 18 days https://flight93.org/abc-raises-fixed-rates-for-second-time-in-18-days/ Mon, 21 Feb 2022 00:02:03 +0000 https://flight93.org/abc-raises-fixed-rates-for-second-time-in-18-days/ Australia’s largest bank, CBA, raised fixed rates for the second time in less than three weeks, with increases of up to 0.25%. The CBA last raised fixed rates on Feb. 3, up to 0.20% for homeowners and investors. As a result, its owner-occupant fixed rate for 2 years is now in line with pre-COVID levels […]]]>

Australia’s largest bank, CBA, raised fixed rates for the second time in less than three weeks, with increases of up to 0.25%.

The CBA last raised fixed rates on Feb. 3, up to 0.20% for homeowners and investors.

As a result, its owner-occupant fixed rate for 2 years is now in line with pre-COVID levels (February 2020). Its longer-term fixed rates are already significantly higher than pre-pandemic levels. Only the CBA’s 1-year fixed and variable rates are lower than they were two years ago.

Today’s CBA increases for homeowners paying principal and interest – contact us for CBA investor changes

Rate type Lowest old rate New lowest fare Change
1 year fixed

2.59%

2.79%

+0.20%

2 year fixed

2.84%

2.99%

+0.15%

fixed 3 years

3.24%

3.49%

+0.25%

4 years fixed

3.54%

3.69%

+0.15%

5 years fixed

3.79%

3.99%

+0.20%

Note: The above rates apply to owner-occupiers who pay the principal and interest of a flat rate.

CBA rates for homeowners – today vs before COVID, February 2020

Rate type Pre-COVID (February 2020) Today Change Difference in refunds ($500,000)
1 year fixed

2.99%

2.79%

-0.20%

-$54

2 year fixed

2.99%

2.99%

0.00%

$0

fixed 3 years

2.99%

3.49%

0.50%

$137

4 years fixed

3.19%

3.69%

0.50%

$139

5 years fixed

3.19%

3.99%

0.80%

$225

Lowest variable

3.22%

2.29%

-0.93%

-$246

Notes: Rates are for homeowners paying principal and interest. Monthly repayments are based on a $500,000 loan over 30 years.

RateCity.com.au research director Sally Tindall said today’s CBA rises show the bank is feeling the pressure of sustained increases in funding costs.

“It’s hard to believe that just five months ago the ABC was offering a fixed rate loan below 2%,” she said.

“Since then, the CBA has increased six times, raising most of its fixed homeownership rates above pre-pandemic levels.

“The big banks in particular have given up on competing with cheap lenders on fixed rates. If customers want to settle with four major banks today, chances are they will have to pay more.

“There are still relatively low rates from low cost lenders, however, in this environment they are unlikely to stick around for long. The RateCity.com.au database shows there is only one 2-year fixed rate starting with a ‘1’, and only 14 1-year rates below that,” she said. declared.

The Big Four Banks’ Lowest Home Loan Rates for Homeowners

Rate type ABC Westpac NAB ANZ
1 year fixed

2.79%

2.49%

2.64%

2.49%

2 years fixed

2.99%

2.74%

2.89%

2.89%

3 years fixed

3.49%

3.14%

3.34%

3.39%

4 years fixed

3.69%

3.54%

3.54%

3.79%

5 years fixed

3.99%

3.79%

3.69%

3.99%

Variable

2.29%

2.19%

2.29%

2.19%

Source: RateCity.com.au. Note: Certain LTV requirements apply.

Lowest homeownership mortgage rates on RateCity.com.au

Category Lender Rate
1 year fixed Unit Bank

1.84%

2 years fixed Geelong Bank

1.99%

3 years fixed Geelong Bank/Bank First

2.39%

4 years fixed Bank first

2.64%

5 years fixed Bank first

2.64%

Variable Reduce home loans

1.77%

Source: RateCity.com.au. Note: Rates apply to homeowner paying principal and interest, certain LVR and location restrictions apply.

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Mortgage Refinance Rates Today, February 18, 2022 | Rates tick higher https://flight93.org/mortgage-refinance-rates-today-february-18-2022-rates-tick-higher/ Fri, 18 Feb 2022 12:15:01 +0000 https://flight93.org/mortgage-refinance-rates-today-february-18-2022-rates-tick-higher/ Editorial independence We want to help you make more informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and allow us to earn a referral commission. For more information, see How we make money. Today, several benchmark mortgage refinance rates went up. Both the 15-year fixed […]]]>

We want to help you make more informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and allow us to earn a referral commission. For more information, see How we make money.

Today, several benchmark mortgage refinance rates went up.

Both the 15-year fixed and the 30-year fixed saw their average rates tend to rise. The average 10-year fixed-rate refinance mortgage rate also rose.

The average mortgage refinance rates are as follows:

Compare refinance rates for a wide range of different loans here.

2022 refinancing rate forecast

Refinance and mortgage rates could be subject to significant volatility this year. Nonetheless, interest rates are expected to continue to rise steadily throughout 2022. Several factors have contributed to this expected rise in interest rates, including higher inflation and a strong economy. This is offset by the uncertainty surrounding the COVID-19 Omicron variant and the possibility of other COVID-19 variants impacting the economy. So even though most experts predict that higher rates will be the trend going forward, we probably won’t see consistent day-to-day or week-to-week gains.

How the Refinance Rate Forecast Affects You

There has been a significant increase in refinance rates, but overall borrowers can still access rates close to historic lows. Now is a good time to refinance if you haven’t done so in the past two years. Homeowners could save thousands of dollars with a rate and term refinance if they can get a new rate 0.75% to 1% lower than their current rate, as a rule.

As home prices have skyrocketed, the ability to turn your home’s equity into cash with a home equity line of credit (HELOC) has grown in popularity. In some situations, a HELOC can make sense, especially when consolidating debt or renovating your home.

Homeowners who are hesitant to refinance will want to consider whether or not it’s right for them. Finding the best refinance deal becomes increasingly important as rates rise.

What you need to know about refinancing fees

As part of the refinancing process, you may have to pay upfront fees called closing costs. Closing costs range from 3% to 6% of your loan amount, so they can add up quickly. Your monthly payment may drop with a refinance, but be sure to keep the loan long enough for the ongoing savings to outweigh the out-of-pocket costs.

30-year refi rate

Currently, the average 30-year fixed refinance has an interest rate of 4.20%, an increase of 18 basis points from the previous week.

You can use our mortgage calculator to get an idea of ​​what your monthly payments will be and to understand how much you could save if you made additional payments. Our Mortgage Calculator will also tell you how much interest you will be charged over the life of the loan.

Fixed refinancing rates over 15 years

Currently, the average rate on a 15-year fixed refinance loan is 3.45%, an increase of 11 basis points from the previous week.

The monthly payments on a 15-year refinance loan will be larger than those on a 30-year refinance at the same rate. However, a shorter loan term can help you build equity in your home much faster.

10-year fixed refinancing rates

The average 10-year fixed refinancing rate is 3.42%, an increase of 17 basis points compared to the rate observed the previous week.

Monthly payments with a 10-year refinance term would cost a lot more per month than you would with a 15-year term, but you’ll pay less interest in the long run.

How we determine refinance rates

Our rollover rate trends are based on daily rate data from Bankrate, which is owned by the same parent company as NextAdvisor. These average daily refi rates are based on a consumer profile meeting these criteria:

  • At least 20% equity
  • Principal residence
  • Credit score 740 or higher
  • Single family Home

The information provided to Bankrate by lenders across the country is displayed in the table below:

Rates as of February 18, 2022.

Take a look at mortgage refinance rates for a number of different loans.

Pro tip

Enter your mortgage payment and other loan information into our mortgage refinance calculator to better understand if refinancing is right for you.

Frequently asked questions (FAQ) about the refinance rate:

Does refinancing still make sense?

While refinance rates are higher than recent record lows, they are still exceptionally low. A lower rate can lower your mortgage payment, so if you haven’t refinanced in the past few years, today’s low interest rates may be a good time to do so.

However, your interest rate isn’t the only factor to consider when determining if the time is right for you to refinance. In addition to the number of years remaining on your existing mortgage, the new repayment term will impact your decision. Those who have paid off their current mortgage for 10 years may want to refinance a 20-year loan so as not to add more years to the end of the loan. Keep in mind that your monthly payment will be higher with a short-term refinance than with a longer-term loan.

Before jumping on an exceptionally low refinance rate, make sure the overall deal makes sense to you.

How to qualify for the lowest refi rate

Your financial situation has a significant effect on the rate of refinancing that you will be able to obtain. Having more equity in your home and a higher credit score usually translates to a lower interest rate.

But your personal financial situation isn’t the only consideration that affects your refinance interest rate. The equity you have in the home also comes into play. Having at least 20% equity in your property is ideal.

Even the mortgage itself has an effect on what your refinance rate will be. A short-term refinance loan usually has lower rates than a longer-term loan. Also, if you want to turn your equity into cash with a cash refinance, you will have to pay a higher interest rate than other types of refinance.

How much does refinancing cost?

When you refinance a mortgage, closing costs typically range from 3% to 6% of the loan amount. So, for a loan of $300,000, you can expect to pay $9,000 to $18,000 in closing costs.

There are a number of factors different lenders take into account when assessing your situation. Compare your options and shop around. Everything from the location of the home to the type of loan you’re refinancing can affect your upfront costs.

Mortgage interest rate by type of loan

Mortgage refinance rate

Mortgage redemption rate

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The Current State of the LIBOR Transition in Commercial Real Estate https://flight93.org/the-current-state-of-the-libor-transition-in-commercial-real-estate/ Thu, 17 Feb 2022 02:53:54 +0000 https://flight93.org/the-current-state-of-the-libor-transition-in-commercial-real-estate/ Author: Chris Moore, Managing Director, Chatham Financial Chris Moore 2022 has seen the transition from LIBOR enter a new phase, with prudentially regulated banks no longer being able to lend in LIBOR and most new commercial variable rate (CRE) real estate loans are now pegged to SOFR-based rates. While some LIBOR tenors will continue to […]]]>

Author: Chris Moore, Managing Director, Chatham Financial

Chris Moore

2022 has seen the transition from LIBOR enter a new phase, with prudentially regulated banks no longer being able to lend in LIBOR and most new commercial variable rate (CRE) real estate loans are now pegged to SOFR-based rates. While some LIBOR tenors will continue to be published by its administrator until mid-2023, the discontinuation and obsolescence of LIBOR for CRE funding in particular seems a foregone conclusion. Given where we are with the transition, now is a good time to take stock of the impact of the transition on CRE borrowers.

CRE borrowers have seen the impact of the transition most clearly in new loan originations. While Agency borrowers grew accustomed to seeing SOFR-indexed loans from Freddie Mac and Fannie Mae in the fourth quarter of 2019, LIBOR alternatives only began to make their way into other CRE funding from significantly until the second half of 2021. There is still no market consensus on which specific alternative rate to use, or even if there will be a single standard at all. Three distinct SOFR-based rates are currently seen in the market: daily simple SOFR (which averages daily SOFR rates over an interest period), New York Fed 30-day SOFR (which examines the Daily SOFR compounded over the 30 days preceding the start of a new interest period) and Term SOFR (a forward rate published by the CME Group based on where SOFR futures are trading relative to the current SOFR) . To add to the confusion, a vocal minority of lenders advocate non-SOFR LIBOR alternatives like the Bloomberg Short-Term Bank Yield Index (BSBY) and AMERIBOR, both of which are intended to better reflect lenders’ cost of funds.

This lack of a standard has confused borrowers as they struggle to understand how each alternative might compare to LIBOR and each other, and whether each alternative might generate
better or worse interest charge over the life of the loan. Borrowers should remember a few key points. Each of these rates tends to correlate well with LIBOR and with each other under normal market conditions. In difficult market conditions, when credit availability tightens, SOFR-based rates may fall relative to LIBOR, BSBY and AMERIBOR, at least for a short time (as observed in the early of COVID-19). SOFR-based rates have historically been lower than LIBOR by around 10 basis points (although the current difference is closer to 5 basis points). Borrowers faced with different LIBOR alternatives should also consider the preference expressed by regulators for SOFR-based rates and the widespread adoption of such rates by most lenders. It is likely that we will continue to observe SOFR in CRE loans for years to come; it is less clear that this will be the case for BSBY and AMERIBOR.

Note: Due to lack of liquidity, forward curves for BSBY and AMERIBOR are not available/representative

The transition to LIBOR alternatives has also created complications for borrowers looking to hedge risk on variable rate loans, either at the request of lenders or at their option. Short-term floats to fund bridging assets often require an interest rate cap to allow a lender to guarantee a worst-case debt service coverage ratio, and balance sheet bank lenders often require float swaps to create a fixed rate profile. These caps and swaps have always been available for LIBOR-indexed loans, but the market for derivatives indexed to LIBOR alternatives is still developing. While this was not the case at the end of 2021, borrowers who hedge SOFR-indexed loans can now reliably purchase SOFR-indexed caps and enter into SOFR-indexed swaps. Borrowers looking to hedge exposure to BSBY and AMERIBOR will find that hedging products for these indices are less available and more expensive.

As the standards for LIBOR alternatives in new lending are set and we move closer to LIBOR extinction in mid-2023, lenders should focus on transitioning their legacy loan portfolios from LIBOR to lower rates. alternatives. This will require borrowers to engage with lenders when loan language governing LIBOR conversion is exercised or lenders seek to modify loans lacking such language. In such situations, borrowers need to be mindful of what is being asked of them by their lenders. LIBOR-to-loan conversions will likely consider a loan spread adjustment to reflect the basis between SOFR and LIBOR-based rates, and this adjustment should be carefully considered (generally speaking, an increase in spread of around 5 to 11 basis points when converting a loan from LIBOR to SOFR is reasonable). A LIBOR conversion in a loan will not automatically trigger a LIBOR conversion in related coverage, so borrowers should also not agree to convert or modify a loan without understanding what is happening with related coverage and whether it there may be asymmetries that alter the lending economy in a negative way.

About Chris Moore:
Chris Moore is a member of the real estate team at Chatham Financial, leading one of the group’s advisory, execution and technology teams and managing comprehensive client relationships. Chris joined Chatham as a Client Consultant, working with private property investors to help them manage their interest rate and currency risk. Prior to working in Chatham, Chris was a Peace Corps volunteer, working with small business owners in a rural part of the Dominican Republic. Chris graduated from the University of Pennsylvania with a bachelor’s degree in economics.

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Daily Mortgage Rates Are Up This Week | February 5 & 6, 2022 https://flight93.org/daily-mortgage-rates-are-up-this-week-february-5-6-2022/ Sat, 05 Feb 2022 10:12:50 +0000 https://flight93.org/daily-mortgage-rates-are-up-this-week-february-5-6-2022/ Despite a brief dip at the start of the week, mortgage rates ended the week up. The average rate on a 30-year fixed rate loan increased to 4.136%, while the rate on a 15-year fixed rate loan increased to 3.125%. Borrowers looking for a 5/1 variable rate mortgage are seeing average rates of 2.789%. Loan […]]]>

Despite a brief dip at the start of the week, mortgage rates ended the week up. The average rate on a 30-year fixed rate loan increased to 4.136%, while the rate on a 15-year fixed rate loan increased to 3.125%. Borrowers looking for a 5/1 variable rate mortgage are seeing average rates of 2.789%.

Loan refinance rates also ended the week higher, with the 30-year refinance rate averaging 4.21%. The 15-year and 5/1 ARM refi rates both increased to 3.193% and 2.839% respectively.

  • The last rate on a 30-year fixed rate mortgage is 4.136%.
  • The final rate on a 15-year fixed rate mortgage is 3.125%. ⇑
  • The latest rate on a 5/1 ARM is 2.789%. ⇑
  • The latest rate on a 7/1 ARM is 3.068%. ⇑
  • The latest rate on a 10/1 ARM is 3.134%. ⇑

Money’s daily mortgage rates reflect what a borrower with a 20% down payment and a credit score of 700 — roughly the national average score — could pay if he or she applied for a home loan right now. Each day’s rates are based on the average rate that 8,000 lenders offered applicants the previous business day. Freddie Mac’s weekly rates will generally be lower, as they measure the rates offered to borrowers with higher credit scores.

Are you looking for a loan? Check out Money’s lists of top mortgage lenders and top refinance lenders.

Today’s 30-Year Fixed Rate Mortgage Rates

  • The 30-year rate is 4.136%.
  • It’s a day infold by 0.07 percentage points.
  • It’s a month to augment by 0.329 percentage points.

Most borrowers choose a 30-year fixed rate mortgage because of the stable interest rate, long repayment period, and affordable monthly payments. The downside is that the interest rate will be higher than that of a short-term loan, which means you’ll pay more for this type of loan over time.

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Average mortgage rates

Data based on US mortgages closed on February 3, 2022

Type of loan February 3 Last week Change
15-year fixed conventional 3.13% 3.02% 0.11%
30-year fixed conventional 4.14% 4.02% 0.12%
ARM rate 7/1 3.07% 2.83% 0.24%
ARM rate 10/1 3.13% 2.89% 0.24%

Your actual rate may vary

15 years today fixed rate mortgage rates

  • The 15-year rate is 3.125%.
  • It’s a day infold by 0.06 percentage points.
  • It’s a month infold by 0.413 percentage points.

The advantage of a 15-year fixed rate mortgage is that it usually has a lower interest rate than a 30-year mortgage and you’ll pay it off in half the time. The downside is that the monthly payments will be higher than a comparable longer-term loan. It could be a good option if you can afford higher payments.

The latest rates of adjustable rate mortgages

  • The latest rate on a 5/1 ARM is 2.789%. ⇑
  • The latest rate on a 7/1 ARM is 3.068%. ⇑
  • The latest rate on a 10/1 ARM is 3.134%. ⇑

Variable rate mortgages will actually start with a fixed interest rate. Once this period is over, the rate will become variable and reset periodically. For example, a 5/1 ARM will have a fixed rate for the first five years, then reset every year. The risk with an ARM is that the interest rate could increase significantly once it becomes adjustable. An ARM could be a good option if you plan to sell the house before the rate becomes variable.

The Latest VA, FHA, and Jumbo Loan Rates

The average rates for FHA, VA, and jumbo loans are:

  • The rate on a 30-year FHA mortgage is 3.868%. ⇑
  • The rate for a 30-year VA mortgage is 4.141%. ⇑
  • The rate for a 30-year jumbo mortgage is 3.852%. ⇑

The latest mortgage refinance rates

The average refinance rates for 30-year loans, 15-year loans and ARMs are:

  • The refinance rate on a 30-year fixed rate refinance is 4.21%. ⇑
  • The refinance rate on a 15-year fixed rate refinance is 3.193%. ⇑
  • The rollover rate on a 5/1 ARM is 2.839%. ⇑
  • The refinance rate on a 7/1 ARM is 3.112%. ⇑
  • The refinance rate on a 10/1 ARM is 3.181%. ⇑
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Average Mortgage Refinance Rates

Data based on US mortgages closed on February 3, 2022

Type of loan February 3 Last week Change
15-year fixed conventional 3.19% 3.43% 0.24%
30-year fixed conventional 4.21% 4.38% 0.17%
ARM rate 7/1 3.11% 3.17% 0.06%
ARM rate 10/1 3.18% 3.25% 0.07%

Your actual rate may vary

Where are mortgage rates going this year?

Mortgage rates have fallen through 2020. Millions of homeowners have responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people bought homes they might not have been able to afford if rates were higher. In January 2021, rates briefly dipped to the lowest levels on record, but rose slightly for the rest of the year.

Looking ahead, experts believe that interest rates will rise further in 2022, but also modestly. Factors that could affect rates include continued economic improvement and further labor market gains. The Federal Reserve has also started to scale back its purchases of mortgage-backed securities and said it plans to raise the federal funds rate three times in 2022 to combat rising inflation from March.

While mortgage rates are likely to rise, experts say the increase won’t happen overnight and it won’t be a dramatic jump. Rates are expected to remain near historic lows throughout the first half of the year, rising slightly later in the year. Even with rising rates, it will still be a good time to finance a new home or refinance a mortgage.

Factors that influence mortgage rates include:

  • The Federal Reserve. The Fed acted quickly when the pandemic hit the United States in March 2020. The Fed announced its intention to keep money flowing in the economy by lowering the Federal Fund short-term interest rate between 0% and 0.25%, which is also low as you go. The central bank also pledged to buy mortgage-backed securities and treasury bills, supporting the housing finance market, but began to scale back those purchases in November.
  • The 10-year Treasury bond. Mortgage rates keep pace with government 10-year Treasury bond yields. Yields first fell below 1% in March 2020 and have since risen. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
  • The wider economy. Unemployment rates and changes in gross domestic product are important indicators of the overall health of the economy. When employment and GDP growth are weak, it means the economy is weak, which can lower interest rates. Thanks to the pandemic, unemployment levels reached historic highs early last year and have yet to recover. GDP has also taken a hit, and although it has rebounded somewhat, there is still plenty of room for improvement.

Tips for getting the lowest possible mortgage rate

There is no universal mortgage rate that all borrowers receive. Qualifying for the lowest mortgage rates takes some work and will depend on both personal financial factors and market conditions.

Check your credit score and your credit report. Mistakes or other red flags can lower your credit score. Borrowers with the highest credit scores are the ones who will get the best rates, so it’s essential to check your credit report before you begin the home hunting process. Taking steps to correct mistakes will help increase your score. If you have high credit card balances, paying them off can also give you a quick boost.

Save money for a large down payment. This will lower your loan-to-value ratio, which is the share of the house price that the lender has to finance. A lower LTV usually translates to a lower mortgage rate. Lenders also like to see money that has been saved in an account for at least 60 days. It tells the lender that you have the money to finance the home purchase.

Shop around for the best rate. Don’t settle for the first interest rate a lender offers you. Check with at least three different lenders to see who offers the lowest interest rate. Also consider different types of lenders, such as credit unions and online lenders in addition to traditional banks.

As well. take the time to learn about the different types of loans. Although the 30-year fixed rate mortgage is the most common type of mortgage, consider a shorter-term loan such as a 15-year mortgage or an adjustable rate mortgage. These types of loans often come with a lower rate than a conventional 30-year mortgage. Compare the costs of all to see which best suits your needs and financial situation. Government loans — such as those backed by the Federal Housing Authority, Department of Veterans Affairs, and Department of Agriculture — may be more affordable options for those who qualify.

Finally, lock in your rate. Locking in your rate once you’ve found the right rate, the right loan product, and the right lender will help ensure that your mortgage rate doesn’t increase until the loan is closed.

Our mortgage rate methodology

Money’s Daily Mortgage Rates show the average rate offered by more than 8,000 lenders across the United States for which the most recent rates are available. Today we are posting rates for Thursday, February 3, 2022. Our rates reflect what a typical borrower with a credit score of 700 might expect to pay for a home loan at this time. These rates were offered to people depositing 20% ​​deposit and include discount points.

More money :

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From survival to prosperity: European leveraged finance looks to the future | White & Case srl https://flight93.org/from-survival-to-prosperity-european-leveraged-finance-looks-to-the-future-white-case-srl/ Tue, 01 Feb 2022 23:09:39 +0000 https://flight93.org/from-survival-to-prosperity-european-leveraged-finance-looks-to-the-future-white-case-srl/ SECURITIES Leveraged loan issuance in Europe increased by more than a quarter, year-on-year, to €289.7 billion in 2021 High-yield issuance reached €148 billion in 2021, up 47% from 2020 (year-on-year) Refinancing accounted for about half of overall leveraged loan and high-yield bond issuance for the year M&A and buyouts saw double-digit year-over-year increases in deal-related […]]]>

SECURITIES

  • Leveraged loan issuance in Europe increased by more than a quarter, year-on-year, to €289.7 billion in 2021
  • High-yield issuance reached €148 billion in 2021, up 47% from 2020 (year-on-year)
  • Refinancing accounted for about half of overall leveraged loan and high-yield bond issuance for the year
  • M&A and buyouts saw double-digit year-over-year increases in deal-related emissions

European leveraged finance markets came back to life in 2021, boosted by a combination of attractive pricing in the first half and buoyant M&A activity in the second half. The result? High volumes of refinancing and issuance of transaction-linked leveraged loans and high yield bonds in Europe. And the momentum behind those double-digit gains is set to continue into 2022.

Leveraged loan issuance in the region increased by 28% in 2021 to €289.7 billion from €227 billion in 2020, putting the market on pace to reach full annual value the highest for the issuance of leveraged loans on By debts registration.

European high yield bond markets were even more buoyant, with issuance for the year amounting to €148 billion, up 47% from the €101 billion posted in 2020 and topping yearly highs dating back to 2015 at the end of the third quarter.

Is this explosive growth likely to continue in leveraged financial markets in 2022?

28%

The increase in leveraged loan issuance in 2021, year-on-year

Business remains robust, even with significant headwinds

Leveraged finance issuance continued to rise through 2021 despite the emergence of several challenging factors, including new variants of COVID-19, rising inflationary trends (and the specter of rising rates of interest), supply chain disruptions and shortages, elections in France and Germany and post-Brexit trade and security tensions between the UK and the EU.

While the increase in overall debt issuance indicates a stable and more predictable market, the motivations of lenders and borrowers have pivoted over the past 12 months. As 2022 dawns, the continued evolution of these motivations is somewhat difficult to pinpoint, although the shift in direction is clear. The drivers of issuance have effectively shifted from survival mode (refinancing) to prosperity mode (mergers and acquisitions and buyout issuances).

After nearly two years of doing business in pandemic-induced quicksand, many companies have finally found their footing and are focused on growth.

View Full Image: European Leveraged Loan Pricing (PDF)

Pricing of European High Yield Bonds — Fixed Rate Bonds

View Full Image: Pricing European High Yield Bonds — Fixed Rate Bonds (PDF)

Refinancing paves the way for stability in 2022

In the area of ​​leveraged loans, refinancing activity dominated issuance in the first two quarters of 2021 as borrowers decided to cut the cost of the most expensive debt, including that incurred during the first series of blockages related to COVID-19.

A drop in average prices for prorated loans and institutional loans – from over 4% in Q4 2020 to less than 4% at the end of Q2 2021 – led to a flurry of opportunistic activity, with issuers rushing to get attractive rates.

The high yield market followed a broadly similar trend, with prices in the first and second quarters falling below the 4% threshold.

The scale of refinancing issuance in the first half of the year was such that it accounted for around half of all leveraged loan and high yield bond issuance in 2021. This despite a significant slowdown in refinancing in the second half of the year, which was characterized by rising prices. For leveraged loans, the average spread on senior institutional debt increased from 3.71% in Q1 to 3.89% in Q4, while the weighted average yield to maturity of fixed rate bonds fell from 3.87% in Q1 to 4.69% in Q4.

This decline in refinancing weighed more heavily on the leveraged loan market. After a summer break, institutional shows failed to keep up with the pace set earlier in the year, with August, September and October ranking among the slowest months for shows in 2021.

Discounts on Original Issues (OID) in Europe

View Full Image: Original Edition (OID) Discounts in Europe (PDF)

Funding for M&As and buyouts intensifies

While higher prices deterred opportunistic refinancings, buyouts and M&A issuances in Europe gained momentum throughout the year, even though the weighted average margin of M&A facilities and redemption exceeded the price thresholds seen at the height of the pandemic.

In 2021, the value of mergers and acquisitions in Western Europe reached its highest level since the global financial crisis as dealmakers caught up with delayed deal times.

High-yield bond issuance, in particular, saw renewed activity in the final months of the year. LBO financings for Business Integration Partners, Keepmoat, Arrow Global, Agrifarma and Polynt-Reichhold, as well as buyout M&A deals, such as MÁSMÓVIL, Multiversity and Cerba HealthCare, have seen high yield bond issues linked in the October operation reach more than 10 billion euros. The fourth quarter of 2021 accounted for more than a third of all high-yield buyout and M&A bond issuance during the year (€33.2 billion).

This flurry of activity at the end of 2021 saw year-on-year high-yield bond issuance in Western and Southern Europe rise 53% to €17.8 billion for M&A without redemption, while redemption-related issues more than doubled to €15.4 billion.

For leveraged loans, year-on-year figures saw a 19% increase in buyout-free M&A loan issuance to €54.9 billion, with buyout issuance up 81 % to 66.7 billion euros.

With sponsors and companies sitting on record amounts of dry powder in the form of cash reserves and ongoing M&A activity, the first quarter of 2022 is shaping up to be a steady flow of funding.

In particular, M&A and buyout activity should continue to drive issuance in 2022, with a strong deal pipeline in place. Significant financing planned for 2022 includes a planned €5 billion loan to finance the merger between automotive suppliers Faurecia and Hella.

Benchmark floors on institutional term loans

View Full Image: Institutional Term Loan Benchmark Floors (PDF)

Active but choppy markets could be on the horizon

In addition to the full M&A pipeline, other notable factors are expected to influence leveraged finance deals in the coming months. For example, borrowers now have more financing options. Record levels of CLO activity in November pushed new CLO issuance up 75% year-over-year, heralding another powerful year for debt market activity.

It was a similar picture in the European direct lending space. The past 12 months of robust deal flow, fundraising and issuance has confirmed the maturity, resilience and credibility of the industry, which is now set for growth through 2022.

The fundraising numbers alone reflect the industry’s increasingly confident position as a stable asset class offering solid returns. According to data from By debtsthe targeted direct lending fundraising activity in Europe in the first half of 2021 had already exceeded the total for the year 2020. By the end of the year, it had reached 36.2 billion euros.

At the same time, however, inflation and the threat of rising interest rates, together with higher prices and an increase in the number of flexible agreements in syndication processes, suggest that borrowers and lenders may have to navigate rougher waters as the year progresses. forward.

And then there’s environmental, social and corporate governance (ESG)-related debt, which is another lever that investors and borrowers will need to consider in their plans. According to White & Case’s ESG Leveraged Loan Deal Tracker, ESG-related loans accounted for nearly a fifth of all European B-term loan issuance at the end of Q3 2021, a fivefold increase from compared to the share of only 4% recorded in 2020.

ESG could serve as an additional incentive for debt issuance in 2022, but it will not be free as the rollout of new benchmarks, including the EU regulation on sustainable finance disclosure and updated sustainability-related lending principles from the European Leveraged Finance Association, introduces greater rigor on ESG finance criteria. Greenwashing and independent verification of ESG performance metrics – both their framing and testing – are likely to be hot topics for ESG bank loan and bond issuances in 2022.

Lenders and borrowers are gearing up for another busy and dynamic year of business, but will need to navigate additional layers of complexity and nuance to stay on top of these fluid market waves.

European leveraged loan issuances by rating

View Full Image: European Leveraged Loan Issuances by Rating (PDF)

[View source.]

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