What is the highest interest rate you have seen?

Question

Was curious to see what the highest interest rate you have seen (or paid) on a secured note?

I have seen 20-30% on 2nd liens in the past, not uncommon - especially if its a wonky type of deal (not your standard single family but land, development deal etc).

I have started seeing some who have 30-50% 2nds from HML on single families.

For firsts I have seen one company recently doing 30%+ on first position liens. Highest we have done was 15%.

Whats the highest you have seen? With those high rates, I am curious on outcomes.

Tracy Z. Rewey · Answer

@Chris Seveney This reminded me of a line in a John Mayer song:

"When I really start to break it down,

I wouldn′t trust a girl who knew about this place."

Even if usury wasn't an issue, I think the note version would be:

"When I really start to break it down,

I wouldn′t trust a payor who agreed to that high of a rate."

Jay Redding · Answer

What about usury laws for owner occupied homes for firsts? I have been seeing 12-13% routinely on seller financed owner occupied 1st lien position. I recently did a short term fix and flip loan investor to investor loan for 6 months @ 5 pts and 15% interest rate. Default rate being 20%.

Chris Seveney · Answer

yes and I am starting to see some seller financing that just completely ignores those usury laws. Can you imagine?

There were people in PA who got hosed because of some contract for deeds from harbour back in the day where I believe the current holder had to go back and reamortize the loan and some of them were paid off or close to it when the buyer thought there was still a good amount of UPB left.

Mike Klarman · Answer

On short term notes I have seen 15%, 18 months or less. Most are 11.5% - 12.5% paid on unpaid balance principle these days. You can get under 11% if you have some experience and good credit. I've seen as low as 9.99% on a bridge loan.

For DSCR, I remember the days of 3.5% being the floor. I've closed three refinances in the last two three weeks at three different lenders. 7.3%, 7.8%, 7.75%.

Leverages varied a little, so did credit. At the buy down shops, you can get into the 6s but it will cost you a few points.

Dan Deppen · Answer

For SFR owner occupied firsts the highest I've seen lately is only around 12%, in TX. Mobile home loans can go up to 17%. The usury rates vary a lot by state and by deal, so I always advise people to talk to their attorney in that state.

Of course some people don't care about any of the rules and just do whatever.... I was one of the people stuck holding the bag on one of those Harbour PA contract for deeds. It wasn't fun.

Bruce Lynn · Answer

I would think something much north of 18% or so would be illegal, at least in Texas.

What is the highest interest rate you have seen?

What is the highest interest rate you have seen?

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