Given Slowing Demand for Multifamily Financing, Fannie and Freddie to Fall Short of Lending Allowances.

The unprecedented decreased demand for multifamily borrowing across the country for the federal agency loans is clear indicator that Fannie Mae and Freddie Mac are not likely to lend their full allotments for 2022.
According to Multi-Housing News, the GSEs, who were each given $78 billion for the year by the Federal Housing Finance Agency, would likely end the year with around $70 billion in originations apiece. As of the end of October, Fannie had originated $54.7 billion and Freddie had originated $51.2 billion.As interest rates have increased, demand for GSE loans has decreased, but even when rates were lower, borrowers frequently resorted to alternative sources of funding.
Geri Borger Urgo, head of production at NewPoint Real Estate Capital, noted during Bisnow’s Multifamily Annual Conference early in December that the GSEs haven’t been at the forefront of lending in the last two years.

Based on acquisition financings, they were rather overpriced, according to Urgo. Bridge lenders entered the market because they thought that having a shorter-term perspective on what lease trade outs would entail made sense when the SOFR (secured overnight financing rate) was 30.

The allocations for Fannie and Freddie for 2023 have recently been lowered by $3 billion to $75 billion by the FHFA. Each GSE must conduct at least half of its transactions in traditionally underrepresented markets with respect to affordable housing.
The agency acknowledged that the market has slowed as higher interest rates continue to restrain demand for mortgages by reducing the allocations for the upcoming year.

The agency stated in a statement that the 2023 caps reflect an anticipated downturn in the multifamily originations market in 2023.

Our Orange County commercial real estate brokers will help you every step of the way in finding the right multifamily investment property, contact us for details.

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