WASHINGTON, DC—One metric that stands out strongly in the latest National Multifamily Housing Council Quarterly Survey of Apartment Market Conditions is respondents' view of multifamily mortgage borrowing. Put simply, it's considerably dimmer than it was three months ago.

NMHC said Thursday that the survey's debt financing index declined significantly from 60 in late April to 35 now. A reading below 50 indicates that borrowing conditions are worsening; the council says this is the first time the debt financing index has fallen below 50 since January 2014.

Just 8% of respondents said that borrowing conditions have improved, compared to 32% who said this last time. Conversely, 38% said borrowing conditions have worsened, compared to 12% who gave this response in April.

“The decline in the debt financing index is significant,” says Mark Obrinsky, NMHC's SVP of research and chief economist. He says it's a reflection of two factors: “the modest rise in interest rates and tightening initiated by Freddie Mac and Fannie Mae as they began to approach their lending volume caps. Regulator action to keep multifamily mortgage finance flowing has averted a crisis, but lending conditions remain somewhat tighter.”

Another financing metric, equity, also slipped below 50, which hasn't happened since October 2013. In this case, the decline was less precipitous, as the equity financing index fell six points to 49.

Here, more respondents said equity's easier to come by compared to those who said the same thing about debt financing: 15%, compared to 8%. Similarly, 59% of respondents said the availability of equity hadn't changed from three months ago, compared to just 45% who said this about debt.

On the other hand, consumer demand for apartments is staying on track. The survey's market tightness index moved up to 61 from 58 in the previous quarter, marking the sixth consecutive quarter of improving conditions, although a smaller percentage (37%) of respondents said market conditions are tightening, compared to those who gave this response a year ago (50%).

When it comes to for-sale apartments, the survey's sales volume index showed improving conditions for the second straight quarter, rising by one point to 53. Given the relatively small increase, it's not surprising that the quarter-to-quarter movement among responses of better, worse or unchanged conditions wasn't as significant.

In a special question added to this quarter's survey, respondents were asked whether single-family rentals posed significant competition for their properties. Most respondents indicated that apartments don't compete very much with single-family rental homes.

Sixty-two percent of respondents indicated that apartments serve different demographic groups than single-family rentals. Another 22% responded that apartments and single-family rental homes are largely in different neighborhoods, while only 15% thought their properties faced direct competition from single-family rentals. “NMHC's survey provides solid evidence that despite the strong pickup in new apartment construction this year, demand for rental housing is even stronger,” Obrinsky says.

The July 2015 Quarterly Survey of Apartment Market Conditions was conducted between July 13 and July 20. One-hundred and twenty-three CEOs and other senior executives of apartment-related firms nationwide responded. The survey's indexes are calculated by taking one-half the difference between positive and negative responses and adding 50.