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MortgageReal Estate

Multifamily borrowing surges 10% in Q2

Jumps 29% from first quarter

Mortgage originations in commercial and multifamily surged 10% annually in the second quarter, according to the Mortgage Banker Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

Not only did multifamily and commercial originations increase from the previous year, they also rose by 29% from the first quarter of 2019.

“Falling long-term interest rates and sustained strength in commercial real estate markets lifted commercial and multifamily mortgage originations during the second quarter,” said Jamie Woodwell, MBA vice president of commercial real estate research. “Originations for life insurance companies and for Fannie Mae and Freddie Mac continued at record paces during the first half of the year, as did originations of loans backed by multifamily and industrial properties.”

“With rates even lower during the third quarter, absent a major economic disruption, 2019 is shaping up to be another record year for commercial mortgage lending,” Woodwell said.

Data from the MBA showed that commercial and multifamily lending hit an all-time high in 2017, and the MBA’s latest forecast suggested that 2018 would likely be another record year for commercial and multifamily mortgage lending.

And recently, Freddie Mac predicted 2019 will see a robust rental market as the nation’s housing shortage, a strong labor market and low interest rates create a potent recipe for multifamily growth.

The increase in second quarter lending volumes stemmed from a rise in originations for health care, office, industrial and multifamily properties. The second quarter saw a 151% year-over-year increase in the dollar volume of loans for health care properties, a 23% increase for office properties, a 16% increase for industrial properties and a 15% increase for multifamily properties. Contrary to the trend, retail property loan originations fell 32% while hotel property lending decreased 28%.

On a quarterly basis, second quarter originations for office properties increased 66% compared to the first quarter 2019. There was a 62% increase in originations for health care properties, a 32% increase for multifamily properties, an 18% increase for hotel properties and a 15% increase for retail properties. However, originations for industrial buildings declined 27% from the first quarter.

Among investor types, the dollar volume of loans originated for government sponsored enterprises increased by a full 19% annually, and 17% for commercial bank portfolio loans. The quarter saw an annual decrease of 4% in life insurance company loans, and a 15% decrease in the dollar volume of commercial mortgage backed securities loans.

Quarterly, the dollar volume of loans for CMBS increased 58% from the first quarter to the second, loans for GSEs increased 39%, originations for commercial bank portfolios increased 35% and loans for life insurance companies increased by 9%.

According to the MBA’s 2019 Commercial Real Estate Finance Outlook Survey released in January, more than half of the top commercial/multifamily originators (55%, to be exact) expect originations to increase in 2019.

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