Writer’s block this morning has me feeling like:
Onwards. Not too long ago I wrote about a potential fixed income investment in HELOCs to prime borrowers. As the Q1 deadline to fund comes up, I decided that we’re passing for now.
The loans are further leveraged with a debt facility to boost returns to investors. Currently, that line of credit is a warehouse line to be replaced with a longer term fixed rate facility. Given rates are moving around quickly and upwards for the most part, I think it’s prudent to wait for the long term facility to get in place and understand what the terms are. Especially since warehouse lines are typically short term and can have floating rate components.
Furthermore, on a more fundamental basis, whether warranted or not I’m not keen on adding more exposure to home values. While a combined LTV (incl. first mortgage) of about 70% seems reasonable, it equates to 100% LTV based on home values only 3 years ago:
To that end, perhaps this investment may be more interesting at some point in the future, but doesn’t check the box on feeling good about the starting point for an investment today.