Government-sponsored enterprise Freddie Mac is venturing past its standard mortgage originations and building a business to originate small apartment loans, between $1 million and $5 million, as part of its mandate to support affordable housing. Per Bloomberg:
The average loan will be about $2.5 million, the McLean, Virginia-based company said today in a statement. The mortgage giant plans to originate as much as $1 billion of such debt in 2015, according to David Brickman, the head of multifamily operations at Freddie Mac.
“It is critical to provide financing for smaller loans and properties, especially since this market segment disproportionately serves lower-income renters,” Brickman said in the statement.
This falls right in line with Freddie’s September Economic and Housing Market Outlook report, which said that the multifamily sector is witnessing a strong rebound as the single-family sector struggles to move at all.
"The apartment market has been vibrant, reflecting the desire of many millennials to live in an urban setting and retain locational flexibility,” Frank Nothaft, Freddie Mac vice president and chief economist, said.
In September the construction of buildings with at least five apartments hit the highest monthly construction pace since the beginning of 2006.