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Freddie Mac outstrips Fannie Mae in multifamily guarantee growth by 19 percentage points

Multifamily lending market looks healthy as both companies report growth in their multifamily portfolios

Freddie Mac’s multifamily guarantee portfolio grew 30% year-over-year whereas Fannie Mae’s grew by 11% from Q1 2017 to Q1 2018.

According to both companies’ quarterly financial results, Freddie grew its portfolio from $164 billion to $213 billion. Fannie grew its portfolio from $253.3 billion to $281.3 billion. This translated to the two companies funding more than 300,000 multifamily units (Freddie funded 152,000; Fannie funded 154,000 units).

New multifamily business volume for Fannie Mae fell by 35% YoY from 17.4 billion in Q1 2017 to 11.3 in Q1 2018. Freddie Mac registered a marginal gain in new business volume from last year, with a 2.4% uptick from $12.7 billion in Q1 2017 to $13 billion in Q1 2018.

In terms of earnings on their multifamily portfolios, Fannie bagged a net gain of $149 million from last year to this year. Freddie on the other hand, saw a loss of $41 million. In its earnings report, the company blames the lost ground on lower fair value gains due to less tightening on K Certificate benchmark spreads, lower new commitment volume and the effects of strategic pricing. The silver lining for Freddie was the drop in income tax due to Trump’s corporate tax cuts.

As a whole, the delinquency rate in the multifamily family market is practically nonexistent. Both companies reported razor thin delinquency percentages. Fannie reported a total delinquency rate in its multifamily guaranty book of 0.13%. Freddie reported 0.02% delinquency, a historic low and good sign for the health of the multifamily market.

 

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