Multifamily Lending Update - Week of 5/31
Market News: New data shows multifamily starts surged in March. Year-over-year starts increased 26.9% to 477,000 units at a seasonally adjusted annual rate (SAAR) in March 2021, according to the U.S. Census Bureau’s monthly Building Permits Survey and Survey of Construction. Combined with the 1.2 million SAAR homes, total residential starts are at their highest level in 15 years. Multifamily permitting activity also climbed 19.2% year-over-year to 508,000 SAAR units in March 2021.
Fannie/Freddie: Fannie and Freddie continue to see record demand across their offerings as trading spreads remain tight. They are both working to make adjustments to pricing and are now considering more credit exceptions to win targeted business needed to reach their $70 billion caps.
Fannie and Freddie have both has eliminated their COVID reserve requirements and announcing procedures for borrowers to immediately request currently held COVID reserves.
Life Company: Multifamily leads the way for life companies. As we near the halfway mark, life company lenders appear to be on track to meet their 2021 allocations. Lenders have enjoyed a price advantage over the GSE’s for high quality product.
CMBS: In the past 5.5 months only seven deals have been issued for a total of $9 billion. Bond spreads have been essentially flat over the past couple weeks. Loan spreads have therefore been unaffected. Lenders are now beginning to look at hotel financing as the economy reopens. Meanwhile, Single Asset Single Borrower (“SASB”) execution has been robust. Issuance to date is $17 billion compared to just $25 billion for all of 2020.
FHA: Through the end of April, HUD continued to push towards record levels of production. HUD’s multifamily production is on pace for $35 billion compared to $20 billion in 2020. The Midwest region is leading all of HUD with over 281 commitments for $3.7 billion, but the Northeast region is far and away the dollar leader with 245 commitments for $5.8 billion. HUD’s most popular program for this year is the 223(f) refinance program with 409 loans and $7.9 billion.