To prevent a slowdown in apartment construction, the Federal Housing Finance Agency (FHFA) will lift the $30 billion annual cap on multifamily-housing residential loans that Fannie Mae and Freddie Mac can offer. The government-controlled companies are likely to reach the cap in the third quarter.
If the cap is not loosened, borrowers could face higher costs and less available credit for multifamily housing investments.
Bloomberg Business reports that the FHFA has considered raising the caps by $5 billion for each entity, as well as making more mortgages exempt from the limit. A final solution will be announced soon.
In Q1 2015, the two mortgage guarantors increased multifamily housing financing fourfold. In that period, Fannie Mae financed $10.4 billion in multifamily housing loans, and Freddie Mac financed $10 billion.
In April, Fannie Mae and Freddie Mac increased the cost of a 10-year mortgage to slow down lending.
“The overall multifamily market has continued to experience very strong growth as demand for rental housing surges in many markets, making affordable housing more and more difficult to find,” says David Brickman, Executive Vice President, Freddie Mac Multifamily. “These changes will enable us to continue to serve our mission of providing liquidity, stability and affordability to the entire multifamily market.”