Thanks to modest rent growth, limited supply, and strong demographics, student housing has been a bright spot for the multifamily industry this year. Despite this, lenders are growing more conservative in their approach to the sector.

The government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have both reined in their underwriting on student housing deals this year. Freddie Mac raised its debt service coverage ratio (DSCR) to 1.35x in late August and also moved the loan-to-value (LTV) ratio to 75 percent earlier this year. Fannie has similarly tightened up: The new ceiling is 75 percent LTV and partial interest-only periods are no longer offered.

With lenders approaching this seemingly recession-resistant sector with more trepidation, some are asking: Why the disconnect? In some cases, lenders are anxiously watching the current lease-up season to determine just how resilient student housing is. “The theory that this segment is recession-resistant makes sense on paper and in theory, but we’ll see how it plays out,” says Mitch Kiffe, vice president of sales at McLean, Va.-based Freddie Mac.

Lenders are also less willing to be aggressive because student housing is a niche area with its own property management skill set. “There are a limited number of really capable and qualified great operators,” says Frank Lutz, a vice president focused on student housing at Fannie Mae.