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MBA: Commercial mortgage originations fell in Q3, but multifamily bucked the trend

Multifamily mortgage originations continued climbing in third quarter

Multifamily mortgage originations continued trending towards another record-breaking year with another strong quarter, the Mortgage Bankers Association reported Monday.

According to the MBA’s latest Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, multifamily mortgage originations rose by 19% in the third quarter compared to last year during the same time period.

Multifamily originations have also showed continued growth throughout the year. Q3 originations were up by 13% over the second quarter, when originations rose by 25% over the first quarter.

The news wasn’t quite as rosy for commercial originations overall.

According to the MBA report, borrowing and lending backed by commercial and multifamily properties fell 3% during the third quarter and was 7% lower than a year ago.

Declines in originations for health care and retail properties led the overall decrease from a year ago. 

By property type, MBA’s report showed a 55% year-over-year decrease in dollar volume of loans for health care properties; a 28% decrease for retail properties; a 19% decrease for hotel properties; and a 17% decrease for office properties.

Originations for industrial properties joined multifamily originations in growing 19% year-over-year.

Compared to Q2, originations in Q3 for hotel properties fell by 30%, originations for retail properties declined by 22% and originations for office properties declined by 18%. Originations of loans backed by health care properties increased by 18%, while industrial property loans basically held steady.

Jamie Woodwell, MBA’s vice president of commercial real estate research, said the overall decrease is likely driven by higher interest rates.

“Rising interest rates took some wind out of the market's sails, with the 10-year Treasury yield starting the quarter at 2.87% and finishing at 3.05%, and the 2-year Treasury starting at 2.57% and ending at 2.81%,” Woodwell said. “The [commercial mortgage-backed-securities] and bank lending markets were the hardest hit. Meanwhile, lending backed by multifamily properties and for the government-sponsored enterprises continued to grow.”

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