NEW YORK CITY—A recent blog from the Urban Institute stated that “after completing a major demographic study projecting homeownership rates through 2030, we concluded that demand for rental housing over the next 15 years will dramatically increase—and we as a nation are not prepared.”

It's certainly no surprise that further expansion is required to keep up with the perennially hot multifamily market. If the Institute is accurate, that bodes well for the lending community, especially the organizations that can differentiate themselves from the competition. With that in mind, we recently caught up with Grace Huebscher, president of Capital One Multifamily Finance, for a frank and expansive conversation about the state and future of the market and the lending that drives it.

GlobeSt.com: What's the overview, Grace?

Grace Huebscher: Fundamentals are very solid. The demand supply is in good shape in terms of most markets, although you have to watch pockets around the country where there's been a lot of new construction, markets such as Washington, DC or Austin, TX. That's not to say that long-term the fundamentals of those markets aren't good or that NOI will go into the negative. But there needs to be caution or the risk of a long-term deceleration of NOI.

GlobeSt.com: Has there been a major movement away from the post-recessionary tendency among lenders to be over cautious?

Huebscher: Both the agencies and the banks were in that very cautious mode post-Great Recession. Since then, both have become much more active than they were earlier in the recovery. And yes, the standards are looser but nowhere near where they were pre-recession.

Across the board, lending agencies are holding firm and are very measured in terms of their approach to credit and the way they underwrite. Banks are getting more aggressive, but too aggressive again only in pockets. There's a lot more aggressive competition on both coasts, but on the whole I see the approach remaining looser but measured.

GlobeSt.com: We have to talk about interest rates. How will it play into the market over the next six months or so?

Huebscher: If there was a big jump in interest rates it would obviously impact the multifamily market. Cap rates have really been driven down a lot because of interest rates and spreads are actually around the long-term average, which means there's an appropriate return, but the treasuries are so low. So some sort of shock in interest rates could have an impact, a pause or adjustment, in the market. You're seeing a lot of borrowers using floating-rate more in the last few years than they have historically. Most of the agency lending we do is fixed-rate, although we do some floating-rate as well. If rates go up, there will obviously be an impact. But at the end of the day, especially when you consider the current international volatility, I don't see rates moving all that dramatically in the next year.

GlobeSt.com: Someone recently told me they'd like to see a small rise, just so there would be adjustment room when the next slowdown hits.

Huebscher: That's interesting. I don't know if it's going to happen that way, though. There's such a healthy demand for multifamily. Fundamentals are at our backs. But we're still facing that international volatility, and if we enter another recession and job growth pulls back, all of that will have an impact.

GlobeSt.com: Beech Street merged with Capital One two years ago now. How does the combined entity, beyond branding, differentiate itself in the competitive market we were discussing before? 

Huebscher: GlobeSt.com ran the article on the synergies we have. When most companies go through an acquisition like this, they spend the first two years integrating. We did that too but planted seeds for those synergies, and that planning is starting to show results. The idea of the combined platform is this: We can go in and listen to our clients' plans for whatever property or portfolio they're looking at and we can tailor the financing for their specific need.

Maybe it's any agency deal or a balance-sheet deal. Maybe it's just a timing issue and they just want to get the acquisition done now, knowing that six months later they'll do an agency deal. Now we have more tools to find the solution for them. It all comes down to providing a level of service that goes well beyond what a borrower is used to. Service of this caliber is a summation of every little step you take along the way, from the moment they show you a deal to the last-minute problems and challenges that come up. In each step, we want to outperform our competitors.

GlobeSt.com: Has the lending pool expanded?  

Huebscher: The lending pool is the same, but the players are doing more multifamily. As we said, the banks are definitely back and really growing their portfolios, especially in multifamily. The GSEs have always been big but they're growing as well. On a combined basis, they're probably going to do more than $80 billion this year. And while that's a record--by a significant margin—depending on what the FHFA does and based on the refis that are coming due, they can be even bigger in 2016.

GlobeSt.com: We started the conversation with an overview.  Let's end with your outlook.

Huebscher: That's the million dollar question and one we ask ourselves internally all the time. And every time we do customer events, we survey our clients and ask them what inning we're in. The consensus is that we're in the later-middle innings. I would probably agree with that.

So for 2016, the outlook is good. Really good. The demand supply nationally is solid, which will bode well for most of the markets nationally, keeping in mind the pockets of overbuilding I mentioned before and the impact it will have on NOI and vacancy. But even factoring that into the national picture, the scale tips toward very robust performance.