More apartment landlords in New York’s metro area chose to apply for a Freddie Mac multifamily loan in the first nine months of 2017, as multifamily lending activity amounted to $968.6 million compared to $531.2 million in the entire 2016.
The government agency has offered the loans from its small-balance loan program, which it established in 2014. David Brickman, head of Freddie Mac’s multifamily business, attributed the increase from the Federal Housing Finance Agency (FHFA).
Brickman said that the FHFA’s exclusion of some segments in the workforce-housing market caused the significant increase in lending. The exclusion applies to Freddie Mac’s annual lending limit. By doing so, the agency prevented a further reduction in workforce housing projects, especially since affordable rental housing already remains scarce.
Property consultancy firm Cushman & Wakefield said that the agency’s active stance on expanding its coverage led it to become “the lender of choice on certain deals for multifamily and mixed-use properties.” Several different lending programs also allowed the agency to provide $2.2 billion in loans between January and September from the “uncapped” pool.
Small Balance Loans
The small-balance loan program offers financing assistance of up to $7.5 million in New York City. It particularly helps small multifamily properties without affordability subsidies, yet caters to low-income and middle-class households.
Demand for the loan program may further increase, after interest rates for a 30-year fixed-rate mortgage (FRM) fell 3.9% during the week ended November 9, according to Freddie Mac’s Primary Mortgage Market Survey. Rates for the 15-year FRM also dropped to 3.24% during the same period. Cushman & Wakefield cited lower interest rates as one appealing factor for a Freddie Mac multifamily loan.
Real estate developers in New York should take advantage of Freddie Mac’s small-balance loan program, especially since there is no guarantee that interest rates will remain low.