The Utah Housing Corporation sold $192.5 million in bonds to finance affordable housing initiatives.
The corporation issued the bonds in two series. The tax-exempt 2024 Series C bonds mature between 2025 and 2054, paying interest at rates between 3.1% and 6%. The federally taxable Series D bonds mature between 2029 and 2054, bearing interest at rates between 5.081% and 6.25%. The securities received a rating of Aa2 from Moody’s Investors Service.
The bonds arrive at a time that researchers describe as the least affordable housing market in Utah history. The University of Utah’s Kem C. Gardner Policy Institute attributed today’s “severely unaffordable” housing to the COVID-19 pandemic, which the institute compared to the 2008 financial crisis in terms of effect on Utah’s housing market.
The researchers warned that the state’s housing crisis is unlikely to be resolved in the near future. “Finally, little progress on housing affordability is likely as price increases return and the housing shortage grows,” analysts at the institute concluded in a report titled “State of the State’s Housing Market, 2022-2024.”
Amid these challenges, the Utah Housing Corporation will use the Series 2024 issuance proceeds to finance programs that are aimed at bolstering the state supply of affordable housing. These include the purchase of mortgage-backed securities and down payment, closing cost, and interest rate assistance.
The Utah legislature established the corporation in 1975 to create “an adequate supply of money with which mortgage loans at reasonable interest rates could be made to help provide affordable housing for low and moderate income persons,” according to the corporation’s website. The bonds are special, limited obligations of the corporation, backed by mortgage revenue and other earnings.
Barclays Capital, Inc served as lead underwriter on the issuance, purchasing the bonds for $196.5 million. The price reflected a premium of $4 million.