Continued Growth - Multifamily Lending Update Week of 7/6
Your Multifamily Lending Update by EM CAPTIAL LLC.
The stock market is rebounding, jobless claims are down (better than expected), and rent collection remains practically steady year over year.
Multifamily investors are increasingly seeking new acquisitions while developers continue to pour hundreds of millions of dollars into new multifamily projects.
Here’s the latest news from the major multifamily lenders:
Fannie Mae: Fannie recently announced it was lowering the UST floor rates down to 60 basis points for 10-20 year term green deals. For reference the non-green floor sits around 90 basis points. Fannie SBL volume remains strong and rates continue to be competitive.
Freddie Mac: Improved green pricing by 10 basis points, this will produce a pricing benefit of nearly 10-20 basis points for the 7-10-year work force housing targeted deals. Freddie also increased the eligibility threshold for special purpose entity (SPE) loans to $20 million from $15 million or less. Competition from Fannie Mae small loans and now various banks have pressured Freddie to reduce its SBL by up to 25 basis points. Demand for SBL products remains high particularly driven by refinancing.
CMBS: New CMBS securitizations will take longer to reach market given the previously mentioned delays in loan accumulation.
This causes aggregation risk in the conduit market. The new securitizations will primarily consist of both legacy loans and new originations. Those backed 100% covid-era loans will reach market come fall. The Single asset & single borrower (SASB) market that had previously been halted in now reigniting its engine.
Life Insurance Companies: Retreating to pre-virus leverage requirements. Most life companies are quoting 65% LTV, slightly up from about 60% LTV from the past 2 months. They are also activity lending below 3% (depending on the deal).
The 10-year currently sits around 65 basis points making rates and fees appealing for 35- and 40-year non-recourse loans. As mentioned, delays continue in the HUD offices, though they have contracted an outside firm to assist with the heavy volume.