Agency Multifamily Delinquencies Rise Amidst Expanding Lending

By RadCRE Research · 2026-10-08 · Market Updates

Multifamily borrowers are facing elevated delinquency rates on agency-backed loans, with Freddie Mac's serious delinquency rate hitting 0.64% in August [1].

Fannie Mae and Freddie Mac Navigating Elevated Delinquency Rates

The multifamily sector is currently experiencing a notable trend: elevated delinquency rates on loans backed by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. This occurs even as both agencies continue to expand their footprint in apartment lending, highlighting a complex and challenging environment for multifamily investors and lenders alike [1].

Freddie Mac, one of the primary agencies, reported a serious delinquency rate of 0.64% in August. This figure represents its highest level in over two decades, as noted by the Mises Institute [1]. Such elevated delinquency rates serve as a critical warning for investors who are already contending with a confluence of adverse market conditions, including weak rent growth, increasing operating costs, and the persistent challenge of refinancing existing debt [1].

While both agencies play a significant role in the multifamily financing landscape, their recent performance on delinquency rates has not been entirely synchronized. Although Freddie Mac's delinquency rate climbed to a multi-decade high, Fannie Mae's rate demonstrated a different trajectory in August, showing a decline [1]. This divergence suggests that while broader market pressures impact both, specific portfolio characteristics or lending practices may lead to varying outcomes for each agency [1].

The current environment of rising delinquencies, coupled with the agencies' continued expansion in lending, underscores the need for vigilant risk assessment in the multifamily market. Factors contributing to borrower distress, such as compressed cash flows from sluggish rent growth and higher operational expenses, remain central concerns. Moreover, the difficulty in securing favorable refinancing terms for maturing debt further exacerbates the situation for many property owners [1].

RadCRE Perspective

Majid Radaei, Founder & Principal Broker of RAD Commercial Realty, commented on the current agency lending landscape: "The uptick in Freddie Mac's serious delinquency rate to 0.64% in August, its highest in over twenty years, is a clear signal of underlying stress in specific segments of the multifamily market [1]. While Fannie Mae's rate showed a decline, the overall trend of elevated delinquencies amidst expanding agency lending requires careful scrutiny. Investors must recognize that weak rent growth, rising operating costs, and challenging refinancing conditions are not theoretical concerns; they are directly impacting borrower performance and, consequently, agency loan portfolios [1]. We advise our clients to undertake rigorous underwriting, focus on assets with strong fundamentals, and consider proactive debt restructuring strategies to navigate this evolving market."

Tags: Fannie Mae, Freddie Mac, multifamily lending, delinquency rates, CRE financing