Your Multifamily Lending Update by EM CAPTIAL LLC.
UPDATE – The National Multifamily Housing Council reported 80.8% of rents have been collected as of June 6 up from 80.2% from May 6. See the payments tracker here.
Fannie/Freddie: Both Fannie and Freddie are seeing a spike in applications as rates remain at historic lows, though Freddie has experienced higher inflows. New acquisition deals going under application at greater rates. Interest rates are relatively stable with recent MBS tightening. The GSE’s are also increasing flexibility for their debt service reserve requirements.
Fannie: Increased demand, still lags Freddie.
Freddie: Freddie’s SBL max leverage products are gaining momentum.
Their Hybrid ARM product has also been attractive as they offer initial 5-, 7- or 10-year fixed-rate period followed by an adjustable rate period through year 20. However, rates remain at historic lows in the mid to high 3s.
CMBS: Eyes are on the secondary market.
The secondary market for CMBS has continued to improve. AAA and BBB spreads have tightened over 25 basis points and 100 basis points respectively. For reference – AAA and BBB are about 30 basis and 400 basis points from the start of the year. As mentioned, banks selling pre-covid inventory will allow of new originations. New pricing at about 65% LTV is swaps plus 325-375 basis points.
Life Insurance Companies: Commercial mortgages are attracting life companies as corporate loan products are tightening given the ample liquidity in the market. Borrowers should see more favorable leverage levels and continued low rates.
FHA/HUD: HUD is overwhelmed by the growth in demand.
Borrowers who have submitted HUD applications can expect longer wait times. Rates have remained roughly unchanged and demand continues to be strong across their product offerings.