Small Balance Multifamily Investment Snapshot — Q3 2018

The volume of new multifamily loans with original balances from $1M to $5M declined to an annualized rate of $47.0B in the first half of 2018. However, activity picked up in the third quarter, bringing the annualized rate up to $49.2B.
National average cap rates for multifamily properties backed by small balance loans increased by 4 basis points (bps) from the second quarter to the third quarter of 2018, edging just below 6.0%.
Leverage on small balance loans has declined in 2018, reflecting the impact of mortgages originated and held on balance sheet by regional and community banks. The loan-to-value (LTV) on small balance loans originated during the third quarter was 67.1%, down 100 bps from a year earlier.
Here’s a quick look at the small balance multifamily finance and investment benchmarks for Q3 2018.
For more insights on the small balance multifamily market, view our recent webinars on the topic and look out for our year-end small balance report.