Multifamily Lending Report
Agency Lending: Fannie and Freddie are to remain as government sponsored enterprises as the outgoing administration previously considered an 11th hour effort to privatize. Pricing has remained relatively steady with the exception of green products which are leading in pricing.
Freddie: Freddie SBL rates have remained largely steady since early November despite an increase in treasuries of over 25% during the same period.
Life Insurance Companies - Life companies are looking to increase their 2021 volume to normalized levels as top line production for 2020 fell over 40% YoY. Rates remain steady despite volatility in the treasury market. To attract additional business some lenders have begun loosening their underwriting standards and increasing LTV’s for both multifamily and industrial to 70%. It is Important to note that life insurance lenders are yield hungry, which makes 10-year loans at high 2% to low 3% attractive.
FHA - HUD issued insurance on over $8.2 billion in loans
Last month, HUD published the new version of the MAP guide. The standards in this guide will be effective for projects submitted to HUD on March 18 or later. All new projects will be eligible to use the new version and its changes, though lenders and borrowers will need to select either the 2016 or 2020 guide (not individual provisions from each). HUD recently released final production numbers for the first quarter of its fiscal year ending December 31. HUD issued insurance on over $8.2 billion in loans. During the same quarter, HUD issued commitments for insurance on over $11.3 billion in loans.
Conduits/CMBS: In 2020, the CMBS market contracted over 40% YoY. The slowdown in lending in hospitality and retail assets dragged volume and reduced bond issuance significantly. The lower issuance resulted in a tightening of spreads by the end of 2020. The year was a rollercoaster for CMBS as AAA spreads widened from 80 bps in the first month or two of 2020 to 228 bps in March and then began to gradually tighten throughout the year ending 2020. Spreads are expected to remain tight as buyer remains high demand as investors cannot find many other fixed-income yield alternatives today.