CMBS Lending Opportunity Opens Up As Fannie, Freddie Shift Focus

Source: Costar

The U.S. capital markets are anticipating a boost in multifamily lending this year, but where the loans will come from — particularly for Class A and Class B properties — could be due for a shake-up.

Loan origination volume in the apartment sector is projected to increase by 13%, adding $40 billion more in opportunities to last year’s total. In addition, Fannie Mae and Freddie Mac, the leaders in multifamily loan purchases, are operating on reduced buying capacity for market-rate properties compared to last year after their federal regulator ordered them to allocate more of their capital to affordable housing loans. That gives other lenders another $30 billion in multifamily capacity to split up.

Lenders that issue commercial mortgage-backed securities are hoping to grab a bigger share of the market against their more formidable competitors, banks and life insurers.

The CMBS market already is starting to see a boost in activity play out. It has priced two multifamily single-borrower deals through the past week. That matches the total of all last year.

Loans with more competitive interest rates on market-rate multifamily properties are perceived to be less risky to CMBS investors, making them more marketable for originators, said Rob Russell, head of CMBS loan production at Greystone, in an interview. READ MORE

The U.S. capital markets are anticipating a boost in multifamily lending this year, but where the loans will come from — particularly for Class A and Class B properties — could be due for a shake-up.


Loan origination volume in the apartment sector is projected to increase by 13%, adding $40 billion more in opportunities to last year’s total. In addition, Fannie Mae and Freddie Mac, the leaders in multifamily loan purchases, are operating on reduced buying capacity for market-rate properties compared to last year after their federal regulator ordered them to allocate more of their capital to affordable housing loans. That gives other lenders another $30 billion in multifamily capacity to split up.


Lenders that issue commercial mortgage-backed securities are hoping to grab a bigger share of the market against their more formidable competitors, banks and life insurers.


The CMBS market already is starting to see a boost in activity play out. It has priced two multifamily single-borrower deals through the past week. That matches the total of all last year.


Loans with more competitive interest rates on market-rate multifamily properties are perceived to be less risky to CMBS investors, making them more marketable for originators, said Rob Russell, head of CMBS loan production at Greystone, in an interview. READ MORE