The Monterey Apartments at West 10th Avenue and Hemlock Street in the South Granville area has sold. The 17-unit heritage ‘C’ class building had been listed for sale in 2012 with an asking price of $4,800,000. It sold in January for $4,497,000, equating to a 3.6% cap rate and a price per unit of $265,000. The building was built in 1925. The buyer was Premier Pacific Properties.

Despite the Bank of Canada’s continued warning that interest rates should rise in the next couple of years, it is now suggesting that a move is “less imminent” due to slower household credit growth. According to BMO: “Modest growth, below-target inflation (0.8% in December), tighter credit rules, easy Fed policy, and a strong loonie argue against a rate hike. We expect the overnight rate to stay at 1% until the spring of 2014, before rising gradually to a more neutral 3½ % in 2016.”  Likewise the bank’s forecast for bond yields is a rise of 100 to 150bps over the next 18-24 months.

This indicates that barring a shock to the system, 5-year money for commercial mortgages will continue to be readily available at near historic lows in the near term, with spreads of 200 to 200 basis points coming in around or under 4.00%.

Source: Bank of Canada