House Rejects Bailout Package

By Keat Foong, Executive Editor

We are going from crisis to crisis. The House voted down the $700 billion bailout plan, and the Dow Jones Industrials plunged by 777.68, or nearly 8 percent—its worst drop in two decades. In the immediate aftermath, it looks as though banks’ short term  interest rates are spiking. That means higher benchmark for short-term, LIBOR-based multifamily borrowing. On the positive side, Treasury yields have fallen further. This is a plus for longer-term, fixed-rate loans, provided spreads do not widen further—which is a big if. If the bailout plan should eventually pass, that should have a calming effect on markets and perhaps spreads as well. But even then, lenders will continue to be conservative, says Bill Hughes, senior vice president and managing director of Marcus & Millichap Capital Corp.