Multi-Family Market Update from a Multifamily mortgage banker

Multi-Family Market Update – December 2020

December 3, 2020

The multi-family real estate asset class has held up fairly well during this COVID-19 pandemic. Most markets have remained healthy, although we have seen vacancy rates creep up and rents soften in most “urban core” locations. The Multi-family asset class is still a favorite among the various lending groups. The following is a summary of how the major lender classifications are currently looking at multi-family financing.

Insurance Companies

  • Most insurance companies continue to be underweighted in apartments and are looking to add to their portfolios.
  • Low leveraged high-quality properties are attracting the most aggressive rates (as low as 2.50% for 10-year-fixed money). Most insurance companies are targeting LTVs below 60% and the lowest rates are reserved for LTVs under 50% on A and most B quality assets. Loan size target for best-in-class pricing will be north of $5,000,000. There are several insurance companies who will go down to $1,000,000 for a multi-family loan.
  • Long-term fixed durations, up to 30 years.
  • Interest-only available predicated on leverage, but more scrutiny on higher LTV and cash out requests.
  • In some cases, insurance companies are taking principal and interest reserves at close. This has been consistent throughout the COVID-19 environment.
  • Typically seeking properties in primary markets.


  • Banks continue to provide competitive short-term loans (floating, 3, 5, 7, and 10 years). Best-in-class pricing, however, is rooted in banks providing interest rate SWAP pricing. This can be problematic for some investors. Make sure to read the fine print on those SWAP contracts.
  • Minimum loan amounts are as low as $500,000.
  • Typically seeking to make loans in primary real estate markets.
  • Depending on the transaction, bank LTVs can get up to 65%.
  • LTV requirements have become more conservative during this pandemic.
  • Banks utilize flexible prepays and inexpensive execution to attract multi-family borrowers to their product.
  • Many banks are requiring principal and interest reserves. In some cases, these reserves are being waived with depository relationship or lower LTV deals.
  • Bridge and construction loans are now readily available.


  • Agencies use interest-only options and loan amounts up to 70-75% LTV to appeal to borrowers in the multi-family space.
  • LTVs, although more conservative due to COVID-19, have shown signs of increasing as debt service reserve requirements have been reduced.
  • Low-cost small balance Freddie and Fannie programs available for deals under $7,000,000.
  • Non-recourse, fixed-rate terms from 3-30 years. Floating rate loans are also available.
  • The approval and closing process can be demanding, as lenders have governmental oversight.
  • Able to lend in secondary and tertiary locations.
  • 10-year fixed interest rates are at historic lows, ranging from 2.50% to 3.50% (LTV/DCR dictated).


  • Highly liquid market after a pause in CMBS lending in March and April.
  • Leverage up to 70% LTV.
  • Defeasance or yield maintenance prepayment penalties.
  • Non-recourse execution.
  • Loan amounts are typically $3,000,000 and up.
  • Interest rates range from 2.75-3.50%, depending upon loan size, quality, property type, and tenancy.
  • Full-term-interest-only available.
  • All locations considered.