Yea. I know what you mean. They claim their costs of funds is higher than the discount rate, and that does make some sense, though I only know what I hear, but I think it has more to do with supply and demand, and like you said they are keeping most of that additional spread (to offset their loses from foreclosures). It used to be just prime plus one for me with no floor, the floor of 6 only went into effect a couple of years ago. I still have one outstanding loan with them from that does not mature for two years that does not have the floor of 6, so the interest rate is about 4.5%, they love to whine about that. And I know they are taking a bath (or at least making nothing on) on a couple of million dollar plus loans they put out at prime and no floor.
For NOO SFRs I get financing from a locally owned bank at 6%, 15 year am, 5 year ballon (actually prime plus 1%, with a floor of 6%, but for practical purposes 6% for the next two years).They are pretty conservative, the most they would loan is 65% LTV, but not an issue for me as I own most of my properties free and clear.
Re: Refinancing for Investment Homes - Posted by Natalie-VA
Posted by Natalie-VA on September 01, 2011 at 22:01:43:
My local commercial lender also puts a floor on our interest rate. It really irks me that the government thinks they are going to encourage investment with low rates, when the only ones benefitting are the banks. They just keep charging us more and keeping the spread for themselves.