IRR loans dominated Cambridge’s landscape in 2020, and January’s IRR closings are keeping pace. Cambridge President Jeffrey Davis is pleased with the momentum so far. “Though interest rates have risen, rates are still very attractive to borrowers,” he commented.

The IRR (interest rate reduction) loan is a unique product available to HUD 232 borrowers to reduce their rate if interest rates drop. Cambridge closed 47 IRR loans in 2020, all made possible by lowered interest rates in response to the COVID-19 pandemic.

So far January 2021 seems to be keeping pace with the IRR trend. Cambridge closed four IRR loans in that month alone, totaling $41,109,297.

FED rates were cut to near zero in 2020, creating much opportunity to not only get a new loan cheaply but for existing HUD loan holders to lower their current interest rates. “It created lots of activity for Cambridge,” Davis recounted. And although rates are on the upward trend, “the correlation with the 10-year bond yield is not apparent, as spreads have been narrowing as rates slightly increase. Rates are still favorable, and HUD and other lenders are being very proactive and flexible on many deals,” Davis remarked. As soon as the pandemic hit and the downward trajectory of the economy became apparent, Cambridge was proactive about reaching out to its HUD borrowers regarding the potential for reducing their interest rates. Cambridge Managing Director Sampada D’silva spent a great deal of time on the phone and online talking IRR with operators, and she expects that trend to continue for the time being. D’silva urges operators who are curious about the IRR program, or whether they qualify, to give Cambridge a call.

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