Although Treasury yields did not trend lower as expected last year, multifamily fundamentals outperformed expectations, and lenders have become more aggressive about issuing new debt for performing properties to start 2025. Slower competition from new construction will likely lift lender sentiment throughout the year, which should support origination volumes and tighten spreads across the sector, according to Northmarq’s 2025 national multifamily outlook report.

The trend follows interest rate volatility and expectations, which have added complexity to transactions and reshaped strategies within the debt and equity markets, according to the report. This year, greater liquidity is expected in the multifamily property sector, especially for acquisition financing. Equity strategies remain complex, with many existing owners seeking preferred equity to recapitalize properties acquired at the market's peak. Meanwhile, developers are encountering challenges in finding equity to bring new projects through the construction pipeline, according to the report.

The agencies increased multifamily loan caps by about 4% from 2024 to 2025 and are expected to lead acquisition financing sources this year. Fannie Mae and Freddie Mac have volume caps of $73 billion for 2025.