Agency spreads tighten as multifamily demand holds steady

Over the past quarter, we've observed a measurable tightening in agency spreads across both Fannie Mae DUS and Freddie Mac Optigo platforms. This compression — typically 10 to 25 basis points depending on loan size and market — reflects intensifying competition among agency lenders for high-quality multifamily assets in primary and secondary markets.

The driver is twofold. First, multifamily fundamentals remain resilient: occupancy levels in most metros have stabilized above 94%, and rent growth, while moderating from the post-pandemic surge, continues to outpace inflation in supply-constrained markets. Second, agency lenders are competing for market share in a year where origination volumes are projected to be lower than the prior cycle peak.

For borrowers, this means now is an opportune time to evaluate refinancing or acquisition financing on stabilized multifamily assets. Pricing on 7- and 10-year fixed-rate agency loans is currently competitive with — and in some cases better than — life company and CMBS executions, while offering more flexible prepayment structures and higher leverage.

We're also seeing agency lenders become more aggressive on proceeds. LTVs up to 80% are increasingly available on strong assets in top-50 MSAs, with DSCR requirements as low as 1.20x in select cases. For sponsors with value-add strategies, Fannie Mae's Early Rate Lock and Freddie Mac's Forward Commitment programs are worth evaluating to lock today's spreads on transactions closing in the next 6 to 12 months.

Our recommendation: if you have a multifamily asset with stabilized or near-stabilized operations, request quotes from at least three agency lenders simultaneously. The spread between the best and worst quote can exceed 30 basis points — a meaningful difference on a $20M loan over a 10-year term.