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.