Your Multifamily Lending Update by EM CAPTIAL LLC.
Fannie/Freddie – Effective September 1st, all Freddie Mac and Fannie Mae ARM quotes are now requiring the 30-day average SOFR index. Inflows remain strong for both servicers and activity is expected to increase in the coming weeks (post labor day).
Fannie: Fannie Mae recently publicized their new Capped 5/5 ARM intended for borrowers with a minimum $100 million in Fannie Mae UPB and leverage greater than 65%.
Freddie: Freddie Mac borrowers with a SOFR-based quote temporarily be allowed to purchase a LIBOR-based cap agreement per predetermined conditions. SOFR caps currently available are slightly more expensive and many expect costs to eventually decline as the market absorbs new product.
CMBS: Spreads in the secondary market remain stable . The lack of new offerings has prompted buyers to drive up prices, thus improving AAA spreads. Unfortunately, BBBs remain wide. BBB spreads are nearly 150bps wider than the start of the year. Stability in the secondary market along with pricing on new issuance has drawn support for tightening loan spreads.
Life Insurance Companies: Life insurance companies remain stable and well capitalized. The life sector remains bullish on commercial mortgages despite coupon rates in the low to mid 2% range. LTV remains sub 70% with floating rates hovering around 2.5-2.75 for 5,7, and 10 year terms.
FHA/HUD: Rates remain at all-time lows as volume remains high. We will await reports post the 9/30 close of their fiscal year.