MortgageReal EstatePolitics & Money

Freddie Mac grows multifamily guarantee portfolio by 30% in one year

Increases in K and SB Certificates drive growth in multifamily portfolio

Freddie Mac revealed Tuesday that its multifamily portfolio increased significantly in the first quarter.

According to its quarterly earnings report, Freddie Mac's multifamily guarantee portfolio saw a 30% growth spurt year-over-year, climbing from $149 billion in the first quarter of 2017 to $213 billion in the first quarter of this year (as seen in the graph below).

Freddie Mac noted that the growth was driven by an increase in K Certificates (Freddie Mac guaranteed structured pass-through certificates) and SB Certificates (Freddie Mac guarantees senior classes of securities issued by third-party trusts and backed by Multifamily Small Balance Loans).

Freddie Mac Q1 2018 multifamily

(Click to enlarge; image courtesy of Freddie Mac)

Though the single-family portion of Freddie Mac’s portfolio still far outstrips the multifamily portion (as seen in the graph below), the multifamily portfolio’s rate of growth reflects the growing importance of the multifamily industry in the American housing market.

Freddie Mac Single and Multi housing Q1

(Click to enlarge; image courtesy of Freddie Mac)

Demand has been increasing for the better part of a decade. Last year, the industry appeared to hit its cycle peak. Q1 numbers indicate the beginning of moderation in the multifamily market.

According to data provided to HousingWire by CBRE Research, there are 588,300 units under construction in the U.S., the highest since the firm began tracking multifamily in 2006. Overall construction starts are beginning to moderate after 2017’s fever pitch in new product. According to CBRE's report, last year saw the highest number of apartment completions since the financial crisis.

Supply and demand appear to be in balance for the time being as net absorptions rose to 230,000 units, and deliveries fell to 260,000 units in Q1.

Going forward, Freddie Mac said that it expects to reduce the modeled capital required for credit risk on this quarter’s $13 billion of new originations by 90%. According to the release, Freddie Mac has already transferred roughly 90% of the risk on the multifamily guarantee portfolio.

Most Popular Articles

FHA loan limits increasing for almost all of U.S. in 2020

Thanks to increases in home prices in 2019, the Federal Housing Administration loan limit will increase for nearly all of the country in 2020.

Dec 05, 2019 By

Latest Articles

HousingWire is growing. Come join us

2019 has been a year of tremendous audience and product growth for HousingWire and we couldn’t be prouder. But we’re not ready to rest on our laurels. Far from it. In fact, 2020 promises to be an even bigger year for HousingWire.

Dec 06, 2019 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please