3 Hot Buttons for Owners: Rents, Rates, Election Impacts
Regions Bank's Troy Marek on the critical factors that will determine multifamily outcomes this year.

The new year always brings expectations and concerns for the apartment sector. With current dynamics, including still-elevated interest rates, the peak surge in new unit deliveries and the recent U.S. elections, this year is no different. Multifamily experts will be watching for the impacts of all of these, and more, on their businesses.
However, there are some certainties: Housing affordability remains a major issue in many (if not all) U.S. markets, apartment rents are likely to start rising again this year and the government-sponsored entities (Fannie Mae, Freddie Mac and HUD/Ginnie Mae) will continue to be primary sources of financing for multifamily borrowers in 2025.
Barring any major changes, the Federal Reserve is expected to continue cutting interest rates. However, expectations for those recently shifted. Following September’s 50-basis-point cut, November’s 25-basis-poin cut and December’s 25-basis-point reduction, the Fed signaled that it was only forecasting two cuts in 2025. Inflation has stubbornly remained above the Fed’s stated 2 percent goal and what happens with further reductions in 2025 remains to be seen.
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How interest rates progress over the coming months will influence finance availability, transaction volume and new construction. According to a Mortgage Bankers Association report of third quarter 2024 multifamily lending, overall originations had increased 56 percent year-over-year and increased 53 percent from the prior quarter. Apartment lending activity is expected to grow further this year as additional interest rate cuts occur.
Multifamily’s major finance providers
The GSEs will remain the primary source of capital for multifamily borrowers. In November, the FHFA announced its 2025 loan purchase caps for Fannie Mae and Freddie Mac. Coming as no major surprise to industry insiders, each GSE’s cap was set at $73 billion, a total of $146 billion for the two GSEs combined, up slightly from 2024’s $140 billion total. The increase reflects an expectation of mild market growth this year. Like last year, the FHFA has mandated that 50 percent of each agency’s 2025 lending activity support mission-driven affordable rental housing. Notably, there are some exclusions to the caps. Workforce housing is one and GSE lending for this multifamily sub-sector is expected to bring the agencies’ totals higher than their annual volume caps.
About a year ago, the GSEs also introduced new sponsor-initiated affordability programs. Borrowers who designate at least 20 percent of their apartment community’s units at 80 percent AMI (area median income) or less, essentially self-imposing an affordability component at their apartment community, are eligible to receive pricing benefits from the GSEs. Because of the clear benefits to borrowers, the lending activity surrounding these programs is anticipated to grow.
Notably, HUD has also released proposed changes to debt coverage requirements that are designed to spur loan activity with borrowers. A loan program benefitting from this is HUD’s 221(d)(4), which serves borrowers looking to finance construction or substantial renovations of market-rate, affordable and rental assistance multifamily properties. All of these initiatives across the agencies demonstrate their commitment to providing liquidity to critical rental housing.
The intersection of new supply and rents
Demand for rental units remains strong, in part because homeownership costs continue to rise. While 2024 brought a bit of a softening in the apartments sector, due in part to a surge in new unit deliveries, that construction boon is going to start tapering off this year. In turn, owners are looking forward to rents increasing again, though rent rate growth isn’t likely to meaningfully pick up until later in 2025. It’s also worth noting that, while new supply will abate, supply deliveries are market specific, thus rent growth won’t occur uniformly. Rent growth in the markets still experiencing new supply deliveries will lag behind the others.
Insurance and other considerations
There are other forces that will undoubtedly impact the multifamily sector this year. One of these, insurance, has added significant pressure to owners over the past few years. As major weather events have wreaked monumental, expensive damage to real estate, premiums have risen dramatically, cutting deeply into revenues. Additionally, some insurance providers have resorted to leaving weather prone states altogether. While premiums had stabilized somewhat in 2024, the recent Hurricanes Helene and Milton may drive them upward again.
Finally, results from the recent U.S. elections are likely to impact the apartments industry as new policies are introduced. The lack of affordable housing is a major pain point across the country, and we may see new legislative initiatives targeting this problem in the future. This is undoubtedly one area everyone will be watching.
Troy Marek is head of Real Estate Capital Markets for Regions Bank, a nationwide multifamily and senior housing real estate lender.
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