FHFA Ups 2025 Multifamily Loan Caps by 4%

FHFA ups Fannie Mae and Freddie Mac loan caps by 4% for 2025 to boost rental housing support.

Han-Gwon Lung & Jordan B.
November 20, 2024

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Good morning. Fannie Mae and Freddie Mac are set to support even more rental housing in 2025, with the FHFA raising their loan purchase caps by over 4% compared to 2024.

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Market Snapshot

S&P 500

GSPC

5,916.98

Pct Chg:
+0.40%

FTSE NAREIT

FNER

816.09

Pct Chg:
+0.64%

10Y Treasury

TNX

4.422%

Pct Chg:
+0.043

SOFR

30-DAY AVERAGE

4.844

Pct Chg:
0.0%

*Data as of 11/19/2024 market close.

BOOSTING liquidity

FHFA Increases Multifamily Loan Caps for 2025

To tackle rental affordability challenges, the FHFA is raising multifamily loan caps for Fannie Mae and Freddie Mac in 2025.

New caps: The FHFA has increased the multifamily loan purchase cap for each Enterprise to $73 billion, a 4% boost from 2024, creating a combined $146 billion in available market support. These caps align with the agency’s annual Conservatorship Scorecard priorities and reflect evolving market needs.

Industry backing: The Mortgage Bankers Association (MBA) welcomed the decision, describing it as “appropriate” amid improving market conditions and declining interest rates. MBA President Bob Broeksmit highlighted the importance of ensuring Fannie Mae and Freddie Mac remain key players in financing housing for lower-income and rural communities.

“The cap levels should ensure that the GSEs are a viable option for lenders that finance properties serving lower-income households and rural areas,” Broeksmit said. He also highlighted the importance of a balanced approach to multifamily capital sources and called on policymakers to prioritize initiatives that increase rental housing supply and affordability.

Off the table: Loans supporting workforce housing will once again be exempt from the caps, enabling Fannie Mae and Freddie Mac to channel more funds toward affordable rental housing initiatives. This exemption prioritizes maintaining or creating affordable rents, often through corporate or public programs.

Zoom in: The FHFA mandates that at least 50% of the Enterprises’ multifamily activities remain mission-driven, underscoring its commitment to affordable housing. These activities are critical for expanding access for low- and moderate-income renters.

➥ THE TAKEAWAY

Staying flexible: FHFA can adjust the loan caps further if market conditions demand more liquidity. However, if the multifamily mortgage market contracts in 2025, the agency will avoid market disruptions by keeping the caps steady rather than reducing them.

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✍️ Editor’s Picks

Dynamic duo: Cushman & Wakefield (CWK) appointed Marla Maloney and Brad Kreiger as co-CEOs for the Americas, aiming to boost growth after a strong Q3.
Landlord dispute: Medical Properties Trust moves to assert control over three California health care units after Prospect Medical defaults on rent payments.
Rate relief: Miami developer Jorge Perez urges "badly needed" interest rate cuts to offset soaring construction costs and sustain commercial real estate demand.
Debt surge: US blue-chip bond issuance hit $1.4T in 2024, the second-highest figure ever recorded, as firms race to lock in favorable borrowing conditions.
Market climb: Goldman Sachs (GS) predicts the S&P 500 will hit 6,500 by the end of 2025, driven by ongoing economic recovery and steady earnings momentum.

🏘️ MULTIFAMILY

A tale of two markets: CoStar reported that while annual multifamily rent growth remained steady at 1.2% in Q3, there were significant rent growth variations in local submarkets across the country.
Privatization push: Discussions about privatizing Fannie Mae (FNMA) and Freddie Mac (FMCC) intensified under a second Trump administration, with complex affordable housing reforms in focus.
Strong demand: Thompson Thrift sold the 214-unit Citadel at Castle Pines near Denver to RREEF Property Trust (ZRPTAX) for $101M, highlighting a booming market despite a dip in per-unit prices.
Sunny financing: Clearline Real Estate secured $95M in loans for Excel Miami Apartments, led by Jenny Bernell in the Arts District.

🏭 Industrial

Doubling down: EQT Exeter expanded across the US with 33 new distribution buildings totaling 5MSF and is poised for rapid industrial sector growth.
Construction slump: Industrial construction completions hit a low, with just 76 MSF completed in Q3, and there are expectations of further declines in the coming quarters.
Storage gold rush: Buchanan Street Partners bought a medical office site in Inland Empire and plans to repurpose it for a 123 KSF self-storage facility, part of its $500M portfolio.

🏬 RETAIL

Franchise frenzy: Blackstone (BX) will acquire a majority stake in Jersey Mike’s Subs, bringing the fast-casual chain’s valuation to $8B, while boosting the brand’s global presence.
Sales slowdown: Lowe’s (LOQ) Q3 sales dipped 1.1% as high interest rates curbed big home projects, though strong online and professional sales softened the blow.
Java jolts: Smaller coffee chains are challenging Starbucks (SBUX) in the net lease market, with new locations near Syracuse offering both drive-up and walk-up services.
For the next generation: Vanderbilt University spent $66.9M on a Park Place shopping center in Nashville, part of its $260M in land acquisitions for a campus expansion.

🏢 OFFICE

Taking the L: A new NYC office building at 799 Broadway sold for 6% below its current $255M debt, highlighting steep hurdles in the office market amid a broader 71% occupancy.
High-rise expansion: Balyasny Asset Management secured 164 KSF at 767 Fifth Ave in NYC, occupying the 12th, 21st, 23rd, 34th, and 35th floors.
DC drama: A foreclosure auction has been set for a 580 KSF Washington, DC office building with a $302M loan after a major tenant departure, and amid high vacancies.

🏨 HOSPITALITY

Kentfield splurge: California Governor Gavin Newsom bought a Kentfield mansion from Hyatt heir Daniel Pritzker for $9.1M, or 7% over asking.

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📈 CHART OF THE DAY

Multifamily housing starts are set to hit their lowest levels since 2013, with a historic gap between starts and completions pointing to reduced apartment supply.