It’s that time of year again: Fannie Mae and Freddie Mac (the GSEs) recently released updated Multifamily Guides, and the Federal Housing Finance Authority (FHFA), has increased agency
lending caps as market conditions are expected to modestly improve in 2025. Along with the increased loan caps, FHFA will maintain its requirement that at least 50% of the GSE’s multifamily business be focused on mission-driven, affordable housing.
FHFA has increased the multifamily loan purchase caps for Fannie Mae and Freddie Mac to $73 billion each in 2025, totaling $146 billion for the year. This marks a 4% rise from the 2024 caps and aims to ensure continued liquidity in the multifamily rental market while addressing growing affordability challenges.
The increased caps reflect predictions of moderate market growth in 2025. In it’s August 2024 Forecast Commentary, Mortgage Bankers Association (MBA) stated, “For 2025, we expect an 18 percent increase in total originations, driven by an 11 percent increase in purchase volume and a 37 percent increase in refinances. Home price appreciation, combined with growth in both new and existing home sales, is expected to support purchase growth in 2025…For-sale inventory continues to recover, but as rates continue to decline, the lock-in effect on inventory should also fade over time.”
A significant part of the FHFA’s 2025 policy is the ongoing exemption of workforce housing loans from these caps. Workforce housing, which helps preserve affordable rents without public subsidies, has seen strong growth since its exclusion from the caps in 2024. Through the third quarter of 2024, Fannie Mae and Freddie Mac financed over $4.5 billion in workforce housing loans—more than double the previous year’s total. This continued support for workforce housing is seen as a critical step in addressing rental affordability for lower-income renters and those in rural areas.
MBA has expressed approval of the cap increase, calling it appropriate given the anticipated modest market improvements and the gradual decline in interest rates. MBA also supports the exemption for workforce housing loans and the FHFA’s flexibility to adjust the caps if the market experiences stronger-than-expected demand. However, if the market underperforms, FHFA has committed to keeping the caps at their set levels, ensuring stability in the sector and reinforcing its commitment to preserving affordable rental housing. MBA President and CEO Bob Broeksmit expressed support for this flexibility, emphasizing the importance of a balanced approach in addressing rental affordability, particularly for lower-income households and rural areas.
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Drew H. McCreery
Drew H. McCreery serves as Managing Director, Multifamily and Technical Director of Agency Services at Partner Engineering and Science, Inc. Leveraging over 20 years of experience, Mr. McCreery is responsible for the overall quality and consistency of Property Condition and Environmental reports associated with the Agency Lenders including Fannie Mae and Freddie Mac.. He is a member of the American Institute of Architects and has a Bachelor of Architecture from California State Polytechnic University of Pomona. Drew frequently shares his deep knowledge of the policy, regulatory, and quality requirements as they pertain to the agency lending landscape through blogs, articles, and speaking engagements. He holds a BA in architecture from California State Polytechnic University of Pomona and pursued Architectural Studies at the National Technical University of Athens, Greece.
