MortgageReal Estate

MBA report indicates minor uptick in commercial and multifamily lending

MBA predicts an overall decrease over the course of 2018

Multifamily originations led the charge in an overall increase in commercial/multifamily lending volumes year-over-year in the first quarter of 2018. According to the Mortgage Bankers Association’s quarterly survey, Q1 commercial and multifamily loan originations increased 1% YoY.

The market is also experiencing expected seasonal softness and underwent a 33% drop in originations from Q4 2017.

At the forefront of the 1% uptick was an 18% overall increase in multifamily originations. No other asset class registered a higher gain, and indeed, retail and health care originations saw large drops, 27% and 39%, respectively. Office saw a small decrease of 1%, and industrial came in with a 14% increase. Investment momentum clearly rests with multifamily at the moment.

Earlier this year, MBA predicted a slight decline in overall commercial/multifamily lending due to natural cooling in the market after frenetic activity in 2017. It remains to be seen whether or not this be true of the next three quarters, but a gain of 1% is hardly an indicator of an upset in MBA’s prediction.

"Borrowing and lending backed by commercial real estate is starting 2018 at roughly the same pace at which it started 2017," MBA Vice President of Commercial Real Estate Research Jamie Woodwell said in a statement.

"The property types drawing the most attention of late continued to follow different paths, with retail originations declining while multifamily and industrial increased.  It was the strongest first quarter on record for originations of loans for life insurance companies and the GSEs, Fannie Mae and Freddie Mac," Woodwell added.

Of the investor types, commercial mortgage-backed securities originations showed the strongest growth, increasing by 12% YoY. Life Insurance companies came in second place with a 9% increase; government-sponsored enterprises increased 8%; and commercial bank portfolios loans decreased 23%.

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