WASHINGTON (Reuters) - The Federal Housing Administration has backed a record $10.5 billion in multifamily rental housing loans during its 2011 fiscal year, the agency said on Tuesday.
The rise in loans for multifamily units reflects an underlying trend in demand for rental property.
The FHA has endorsed nearly 1,100 multifamily loans this fiscal year, which runs until October 1, more than seven times the amount it backed three years ago. For the second time, loan activity exceeded $10 billion.
“FHA has never been more relevant in making sure the multifamily apartment marketplace continues to function even during these tough economic times,” Carol Galante, FHA’s acting commissioner, said in a statement.
The Commerce Department reported last week that while housing starts slipped 1.5 percent in July to a seasonally adjusted annual rate of 604,000 units, starts on multifamily housing, often used for rentals, rose 7.8 percent to 179,000 units.
When private lenders began to pull back from lending after the U.S. housing market peaked and began to lose steam ahead of the 2007-2009 financial crisis, the FHA’s total loan volume rose. That volume stood at $54 billion in 2006 but soared to $376 billion in 2009, according to Inside Mortgage Finance, an industry publication.
The FHA guarantees loans made to borrowers who meet certain restrictions. It does not make loans directly. Combined, the FHA and government-run Fannie Mae FNMA.OB and Freddie Mac FMCC.OB own or guarantee about 90 percent of all U.S. mortgages.
Reporting by Margaret Chadbourn