Multi-family properties continue to be among the most favored real estate investment categories and multi family financing is the favored property financing category for many lenders. Agency lenders Fannie and Freddie are working to attract the cream of those loans.
“Freddie Mac and Fannie Mae lenders are once again fighting hard to make deals . “Agency lenders are now beating banks and life companies—when they want the loans, they are beating them,” says Richard Katzenstein, senior vice president and national director with Marcus & Millichap Capital Corp. in the firm’s New York City office.
That’s a big change from just a month ago, when the mortgage giants were hiking up interest rate spreads in a frantic attempt to stay under the limits set for them by federal regulators. The interest rates offered by Freddie Mac and Fannie Mae lenders were once again competitive by the first week of October 2019.
However, multifamily borrowers still face some uncertainty on how the new federal caps will work in practice. The higher caps might not seem as high as they do today as interest rates drop more borrowers look for low interest financing. The new caps also cover an unconventional time span—a year and a quarter—that might make it difficult for
the GSEs to set the right pace for themselves.
“There is going to be a lot of demand for debt,” says David Borsos, vice president of capital markets for the National Multifamily Housing Council (NMHC), an industry association based in Washington, D.C.
As of October 4, Freddie Mac and Fannie Mae charged interest rates fixed at 180 to 210 basis points over the yield on 10-year Treasury bonds for typical apartment loans covering up to 80 percent of the value of the properties, with a debt service coverage ratio of more than 1.20x, according to real estate services firm CBRE.
“Spreads are down 30 to 40 basis points in the last three weeks,” says Katzenstein. […]”
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