Multifamily originations to hit all-time high in 2020

Low interest rates to drive significant growth in 2019, 2020

Multifamily originations are set to hit yet another all-time high in 2020, according to the Mortgage Bankers Association.

Last year, the MBA forecasted that multifamily lending was on track to set another record in 2018. And before that, the association reported multifamily hit an all-new high in 2017.

Now, 2019 is on another great track, looking to break records once again. The MBA forecasted Monday that commercial and multifamily mortgage bankers will close a record $652 billion in loans backed by income-producing properties this year, an increase of 14% from last year’s $574 billion.

Total multifamily lending, which includes some loans made by small and midsize banks not captured in the overall total, is forecast to rise to $359 billion, which is also a record and is 6% higher than last year’s record total of $339 billion.

But the growth won’t stop there. Multifamily originations are expected to surge to new heights once again in 2020. MBA anticipates volumes will rise again in 2020, reaching $700 billion of commercial/multifamily mortgage bankers originations, and $390 billion of total multifamily lending.

Why? In part, low interest rates.

“The low interest rate environment, coupled with continuously strong demand for commercial and multifamily assets, has pushed property values higher and increased demand for mortgages,” said Jamie Woodwell, MBA vice president for commercial real estate research. “At the beginning of the year, many economists, investors and others anticipated long-terms rates would be around 3% and rising – potentially putting pressure on property values anddecreasing demand for debt.”

“Instead, the 10-year Treasury yield is at approximately 1.5%, and many market participants are planning for rates to remain ‘lower for longer,’” Woodwell said. “The result is heightened demand and higher volumes.”

The MBA also announced that it appears banks lent considerably more in multifamily mortgages in 2018 than it previous estimated – making more than $100 billion in multifamily loans.

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