Extell Markets Mortgage Rate Incentives in Cool Markets

Gary Barnett of Extell with Brooklyn Point and One Manhattan Square (Getty, One Manhattan Square, GrissJr, CC BY-SA 4.0 via Wikimedia Commons)

A developer is offering perks to two New York City properties to ease potential buyers’ concerns about borrowing costs.

Extell Development offers a “Rate Rewind” program at One Manhattan Square on the Lower East Side and Brooklyn Point in downtown Brooklyn. Under this program, the sponsor reduces the mortgage interest rate by 2% each year for his first three mortgages.

Ryan Serhant, a broker in charge of marketing for Brooklyn Point, said the offer would help “get serious buyers who are already in the market to their goals.”

“Like any time of economic change, the impact of rising interest rates may make it seem like there is less opportunity for great value in today’s market, but that is not true,” said Serhant. ‘ said.

There is plenty of room for buyers who want to grab promotions. Marketproof data reported by bloomberg It shows that 57% of One Manhattan Square’s 814 units were sold, and Brooklyn Point’s 66% of its 481 units were sold.

According to Nestseekers chief economist Erin Sykes, the offer to cut mortgage payments based on 75% of the purchase price over a period of time has been incorporated into marketing strategies for large developments as well. One of the sweeteners.

“Without the profit, they wouldn’t have suffered the loss,” Sykes said. “This is to keep the momentum going and to actually be more aggressive during this time when a lot of people are starting to get scared. This is a very bullish strategy.”

This isn’t the first incentive play by Gary Burnett’s company behind the iconic condominium towers Central Park Tower and One57. In order to cope with the slump in the condominium market in 2018, Extell made a portfolio-wide proposal Covers 3 to 5 years of common service fees for apartments purchased before the end of the year. Lower East Side towers offered up to 10 years of no common service fees before announcing a ‘rent and buy’ program to expedite contracts in 2019.

Burnett told Bloomberg Transactions are moving buyersdespite the recent market slowdown.

The developer’s latest offer comes as mortgage rates continue to rise. In October, the average 30-year fixed mortgage rate rose for his 10th straight week, 7% to 21-year high.

Future home buyers are responding by withdrawing from the market. The Mortgage Bankers Association reported in late October that application activity had fallen to its slowest pace since 1997.

New development sales in New York In October, it dropped to pre-pandemic levels, down 20% from September and 36% from October 2019.

Extell appears to be the only company trying to set mortgage rates to attract buyers, but more developers could move to deal with the unpredictable future of the mortgage market. .The Federal Reserve indicated earlier this month that a smaller rate hike could come on the horizon It continues to grapple with inflation at its highest level in 40 years.

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