91-Day Treasury Bill – Average Auction Rate | ||
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Week Ending 06/17/09 0.160% | Month Ago 05/20/09 0.185% | Year Ago 06/19/08 2.09% |
Determines the minimum interest rate the seller must impute in a delayed §1031 transaction and report when not receiving interest on §1031 monies held by a facilitator/accomodator and sets the amount of the ordinary income the facilitator/accommodator must report. See first tuesday article, “Interest imputed on §1031 monies delivered to facilitators.” | ||
10-Year T-Bonds – Average Market Yield | ||
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Current 06/19/09 3.75% | Month ago 05/22/09 3.29% | Year ago 06/20/08 4.20% |
This rate is a leading indicator of the direction of future FHLMC rates, which historically run around 1.4% higher during a stable money market. The rate is comprised of the level of worldwide demand for the dollar and anticipated future domestic inflation. | ||
Average 30-Year Conventional Commitment Rate | ||
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Current 06/18/09 5.38% | Month ago 05/21/09 4.82% | Year ago 06/19/08 6.42% |
The average 30-year commitment rate is the rate at which a lender commits to lend mortgage money in the United States-West as reported by FHLMC. More information is available here. | ||
6-Month Treasury Bill – Average Auction Rate | ||
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Month of 06/09 0.29% | Month Ago 05/09 0.29% | Year Ago 06/08 1.87% |
The ARM interest rate equals the 6-month T-Bill rate (at time of adjustment or an average of several prior rates), plus the lender’s profit margin. | ||
Treasury Securities Average Yield — 1-Year Constant Maturity | ||
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Month of 05/09 0.47% | Month Ago 04/09 0.52% | Year Ago 05/08 2.19% |
The ARM interest rate equals T-Bill yield, plus the lender’s profit margin. The index is an average of T-Bill yields with maturities adjusted to one year. | ||
12-Month Treasury Average | ||
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Month of 05/09 1.21% | Month Ago 04/09 1.34% | Year Ago 05/08 3.29% |
The ARM interest rate equals T-Bill average yield plus the lender’s profit margin. The index is an average of the one-year T-Bill rates for the past 12 months. | ||
Cost-of-Funds Index (11th FHLBB District) | ||
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Month of 05/09 1.63% | Month Ago 04/09 2.00% | Year Ago 05/08 3.11% |
The ARM interest rate equals Cost-of-Funds, plus the lender’s profit margin. Current index reflects the cost of funds two months’ prior in the Unites States-West. More information is available here. | ||
London Inter-Bank Offered Rate | ||
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1 Month 0.32% | 6 Month 1.22% | 1 Year 1.60% |
The ARM interest rate equals the LIBOR rate plus the lender’s profit margin. The rate is set by the banks in London, England. | ||
Prime Rate | ||
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Month of 06/09 3.25% | Month Ago 05/09 3.25% | Year Ago 06/08 5.00% |
The prime rate is used by banks to price short-term business loans and set ARMs tied to the prime rate. Historically the rate is 3% over the Federal Funds Target Rate. | ||
Discount Rate – Federal Reserve Bank of San Francisco | ||
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Month of 06/09 0.5% | Month Ago 05/09 0.5% | Year Ago 06/08 2.25% |
Usury law limits the annual interest yield on nonexempt loans to 10%, or the discount rate plus 5%, whichever is greater. The discount rate is charged on loans made by the the Federal Reserve Bank to its members. More information is available here. | ||
Applicable Federal Rates | ||
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Short (to 3 years) 0.75% | Medium (3 to 9 years) 2.03% | Long (9+ years) 4.20% |
Determines minimum interest yield reportable on carryback financing. The AFR category is determined by the carryback due date. *Rates are for monthly payments. Click here for AFRs on other payment periods. | ||
Consumer Price Index — Urban Consumer (CPI-U) | |||
| San Francisco | Los Angeles | ||
| April 2008 | 222.074 | April 2008 | 224.625 |
| April 2009 | 223.854 | April 2009 | 221.693 |
| Annual Change | + .795% | Annual Change | – 1.30% |
The CPI is used in leases to adjust rents. San Diego CPI-U is published semiannually and figures are 234.772 for the second half of 2007 and 242.185 for the second half of 2008, a 3.06% increase over the same period last year. More information about the CPI is available here. | |||
Rate Analysis for Private Lender Section 32 Reg Z Loans | ||||||
Monthly* | 6-Month | 1-Year | 2-Year | 3-Year | 5-Year | 7-Year |
May 2009 | 0.30% | 0.50% | 0.93% | 1.39% | 2.13% | 2.81% |
On junior trust deed loans a margin of 5 – 8% points is added to the Index Figure (Cost-of-Funds Rate) for the maturity date of a Treasury bill equal in length to the pay off date of the loan to set the Section 32 threshold for term limitations. With this in mind, if the percentage of the total loan amount represented by points and fees is greater than the applicable Federal Securities Rate plus ten percentage points, additional disclosures, limitations and prohibitions are triggered by Reg Z Section 32. For more information, please reference first tuesday’s articles Regulation Z Controlled Lending and Brokering Cal-32 High-Cost Loans. Also, see first tuesday Form 223-1 Points and Fees Test as well as first tuesday Form 223 Supplemental Truth-in-Lending Section 32 Disclosure. | ||||||
*Selection of rate:
The rate for each month is set as the rate of the Treasury Security for each maturity date (term) on the 15th of the prior month as provided by the Treasury’s statistical release H. 15.*Rate information gathered from:
The Federal Reserve Board
Federal Reserve Bank of San Francisco
Federal Reserve Bank of St. Louis
The Bureau of Labor Statistics
The Federal Home Loan Bank of San Francisco
Freddie Mac
Fannie Mae
U.S. Department of Labor
U.S. Department of the Treasury
Internal Revenue Service
For more information on interest rate related topics, see:
“To know now what one year forward will bring”, March 2009 issue
