Dive Brief:
- Despite a dramatic slowdown in the second half of the year, the multifamily lending universe continued to grow in 2022.
- Multifamily loans outstanding pushed past $2 trillion for the first time last year, according to data and analytics firm Trepp. Overall, apartment lending rose 9.3% to $170.8 billion year over year in the third quarter.
- Powered by the increase in multifamily loans, commercial real estate mortgages also rose 9.3% YOY to $474.2 billion in the third quarter of 2022.
Dive Insight:
Fannie Mae and Freddie Mac’s combined volume increased by $106.1 billion in the third quarter. But the government-sponsored enterprises weren’t the only driver of high loan amounts, according to Trepp.
The inventory of multifamily loans rose 17.6% to $657.1 billion for banks and thrifts in the third quarter, according to Trepp. For securitization vehicles like commercial mortgage-backed securities, debt outstanding rose 19.2% to $83.3 billion. Life insurers’ volume increased 8.1% to $189.3 billion.
In 2023, the picture could get murkier with many people predicting a smaller market.
“Generally speaking, we think it will be slower in the first half of the year and busier in the second half,” said Dan Brendes, senior vice president and head of GSE lending at New York City-based commercial real estate services firm Berkadia. “How that plays out and at what velocity is hard to nail down.”
With other sources of capital, like debt funds, fading away as interest rates increased, most observers expect Fannie Mae and Freddie Mac to grab the bulk of apartment lending in 2023. Freddie Mac recently named two senior vice presidents — multifamily division chief operating officer Bill Buskirk and head of production and sales Steve Johnson — as it prepared for the year ahead. Both will report to head of multifamily Kevin Palmer.
“I think the agencies will pick up a bigger portion of the pie,” Brendes said. ”You may see agency market share go up.”
In November, The Federal Housing Finance Agency established lending caps of $75 billion each for Fannie Mae and Freddie Mac, giving them a total of $150 billion for 2023. Last year, the government-sponsored enterprises had $78 billion each to allocate for multifamily loans.
Kyle Draeger, senior managing director of multifamily debt and structured finance at CBRE Capital Markets, thinks those allocations should be adequate. “I think the $75 billion each is probably a fine number there,” Draeger said. “They’re still going to be actively lending to the extent people want money.”
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