Weekly Multifamily Lending Update: This is the time to exercise patience and hold out for the right loan, and not necessarily the first loan.

Last Friday (3/20) we released our blog post What Multifamily Lenders are Doing RIGHT NOW to keep clients apprised of how lenders were reacting to COVID-19. But this situation is changing day to day, so our Lead Mortgage Broker Alex Mundy will be providing weekly updates based on the latest news and ongoing conversations with lenders.

  • Significant pressures will keep rates low for the foreseeable future—these include action by the Fed, government stimulus, and competitive pressures as lenders shore up their books and re-enter the market as the crisis subsides. Keep in mind that the last time the FOMC dropped the target rate to zero was in 2009, and the target was held until 2015.
  • Rates are volatile and lenders are making rapid policy changes, which makes good deals harder to find. Life companies are priced at 4.00%-5.00%, banks are priced at 3.25%-5.00%, and the agencies are changing daily.
  • Some lenders are temporarily out of the market, but they will come back. Here is what we’re seeing by category:
    • Fannie Mae and Freddie Mac are not priced competitively and are requiring substantial reserves up front including twelve months of principal and interest, taxes, insurance, and capital reserves. They will come back as near-term risks subside and as government stimulus flows to mortgage-backed securities.
    • Banks and credit unions remain relatively strong, but we saw at least five major lenders effectively pull out of the market this week.
    • Life insurance companies are tightening credit requirements and raising rates. AAA bond yields can act as a “floor” with life companies and hit 4% briefly this week.
    • Non-agency CMBS is at a standstill until their securities can resume selling. The Fed’s asset purchases should help settle the market.

If you need to refinance or obtain purchase financing right now, we can help find the best options amidst the chaos. If you have the time to take a wait-and-see approach, we can work with you in the coming weeks to help identify the right time to move.

Contact: Alex Mundy | 206.747.4725 | alex.mundy@kidder.com