While the final numbers are not yet in on the FHA Apartment Loan financings for fiscal year 2012, through 11 months, the results are as follows:

Firm Commitments: 2,073 versus 1,669 for FY 2011
221 (d) 4 Apartment loans (New Construction and Substantial Rehabilitation): 190 versus 216 for FY 2011
223 (f) Apartment loans (Purchase and Refinance): 1,875 versus 1,444 for FY 2011

What is the take away from these apartment loan numbers? Well, first, the increased escrow and equity requirements of the New Construction Apartment mortgage program are beginning to impact the number of deals being underwritten. At a time when markets across the country are experiencing higher occupancies and increasing rents, this approach seems counter intuitive, but that is a policy question that FHA needs to be addressed.

Secondly, more new construction apartment financing is needed nearly everywhere and new apartment loans result in new jobs for construction. I don’t know why we are benefited in any way by doing fewer apartments loans for new construction in this rate environment. It only makes good financial sense for all the parties involved to take full advantage of this economic climate.

On a happier note, the strong increase of apartment loans for refinances shows that deals are getting done and people are benefitting from the lower rates. It’s clear that borrowers recognize the significance of historically low apartment mortgage rates and are securing their future by locking in now.

My suggestion: if you can get an apartment loan for your property at less than 3% rates, non-recourse, for up to 35 years, that is also assumable, you should strongly consider making that move now. With cap rates as low as they are in most markets, you can probably pull some cash out with that apartment loan as well.

For FHA purposes, putting as many low rate apartment loans on the books in this rate environment makes all the sense possible. The loans will stay on the books for a long time and will be secure forever.

I will update this when the numbers are final.