WASHINGTON – The Federal Housing Finance Agency announced Wednesday it had raised a cap on the amount of multifamily loans Fannie Mae and Freddie Mac can buy from lenders, boosting it to $35 billion effective immediately.

The adjustment from the previous cap of $31 billion is warranted "based on increased estimates of the overall size of the 2016 multifamily finance market," the agency said.

The cap it supposed to ensure that the government-sponsored enterprises don’t crowd private investors out of the multifamily market.

The multifamily cap was set last May, when the FHFA decided to exclude subsidized affordable housing, manufactured housing communities, small multifamily properties (five to 50 units) and certain other affordable rentals from the limit. Those exclusions will remain in place.

Due to these exclusions, Fannie Mae financed $42.3 billion in multifamily loans and Freddie financed $47.3 billion in 2015 without exceeding the cap.

"Supporting liquidity in the multifamily housing finance market remains a priority for FHFA and we will also continue to ensure that Fannie Mae and Freddie Mac maintain their strong support for financing of affordable and workforce housing," said FHFA Director Mel Watt.

The Mortgage Bankers Association welcomed the agency's decision.

“MBA supports FHFA’s data-driven approach in reviewing the size of the multifamily loan origination market," said David Stevens, the group's president and chief executive.

"Current consensus projections for the size of the 2016 market, including MBA’s own, have increased to approximately $260 billion from earlier projections in the $220 billion range. FHFA’s review and adjustment mechanism in its 2016 Scorecard and its close monitoring of changing market conditions will support continued liquidity in workforce rental housing, help avoid market disruptions, and allow for competition among capital sources that finance this vital market.”

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