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3 min read

Multifamily investors face a bevy of concerns: market volatility, interest rate uncertainty and maturing debt among them. 

While there’s no quick fix for these issues, agency lenders are stepping up to provide multifamily investors with financing options in a challenging economic environment. 

Lower interest rates and transaction costs

Some banks and credit unions offer aggressive terms—and sometimes shut down credit altogether—when the market is volatile. That’s not the case for agencies.


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Fannie Mae and Freddie Mac are in the market every day regardless of economic uncertainty or market volatility,” said Jon Hyduke, Executive Director of Agency Lending at JPMorgan Chase. “Agency lenders will continue to quote and fund deals, even in the worst of times.” 

Even in a high interest-rate environment, agency debt may offer competitive interest rates, as loans are benchmarked by underlying Treasury rates. Most bank financing is shorter-term and floating rate.

The agencies may also help borrowers save on transaction costs—one of the key determinants of net returns. “Fannie and Freddie’s transaction costs are typically some of the lowest in the market due to the agencies’ standardized underwriting process,” Hyduke said. “This leads to a quick and efficient timeline from signed application to loan funding.” 

“Agency lenders will continue to quote and fund deals, even in the worst of times.” 

Flexible underwriting and loan terms

Both agencies have long-term fixed-rate loan programs that allow borrowers to lock in favorable rates for extended periods, which can provide stability and predictability during times of volatility.

But there’s a tradeoff. Agencies’ fixed-rate programs often have stronger prepayment penalties, such as yield maintenance or defeasance until the last six months or the loan term.

There’s some flexibility with fixed-rate loans; borrowers can buy down the prepayment penalty periods. “For example, the agencies have structured loans with a 10-year term and a five-year prepayment period,” Hyduke said.

Fannie Mae and Freddie Mac also offer long-term variable rate programs that give borrowers flexibility on prepayment penalties. “Typically, these loans are structured with an initial 12-month lockout period, then 1% thereafter,” Hyduke said. “Agencies can also provide longer periods of interest-only for floating rate loans, which helps lower monthly mortgage payments.”

Agency’s expanded loan products

Many of Fannie’s and Freddie’s products are designed to not only increase borrowers’ access to capital, but also reduce costs.

  • Early rate-lock programs let borrowers lock in their interest rates right after they apply to avoid climbing interest rates during the underwriting process.
  • Lease-up programs allow multifamily investors to set their interest rate and fund loans prior to their properties being rent stabilized.
  • Pricing incentives to go green include discounts on multifamily properties that invest in energy-saving improvement and buildings with green certifications.
  • Affordable housing programs offer better terms to multifamily properties that help GSEs achieve their goal of expanding affordable rental housing.

Plan for the future

It’s important that multifamily agency borrowers provide their lender with insight into their portfolio, strategies, and business and property goals, especially in challenging economic times.

Working with an agency lender should be more than a one-off event. It can be an important long-term business relationship.

“The agencies have products that can accommodate an entire investment strategy that goes beyond the financing needs of just one loan,” Hyduke said. “With insights from the client, the lender can take a more holistic approach and tailor solutions to borrowers’ specific needs.”

Whether you’re acquiring a new property or refinancing an existing one, you have several bank and agency financing options to consider.

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