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Life insurance companies to fuel multifamily surge in 2020

Could fund additional $10 billion in multifamily

Life insurance companies are set to create a surge in multifamily lending in 2020, according to a new study from the Mortgage Bankers Association.

This should help propel multifamily originations, which are set to hit yet another all-time high in 2020, according to the MBA.

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.

Life insurance companies could increase lending volumes by about $10 billion in 2020, compared to 2018 volumes, the study showed. Life insurance companies surveyed indicated that they would like to increase their portfolio holdings between $50 billion and $120 billion in loans backed by multifamily properties on their balance sheets over the next five years.

“Life insurance companies report a strong appetite to make multifamily loans,” said Jamie Woodwell, MBA vice president of commercial real estate research. “The $10 billion in additional multifamily lending they seek would correspond to an over 30% increase in their multifamily lending volumes, and account for roughly 3% of the total multifamily lending market, based on 2018 figures.”

MBA surveyed life insurance companies about their capacity to make portfolio loans backed by multifamily properties. Life insurance companies are a significant source of mortgage debt for commercial and multifamily property owners, and have been increasingly active in recent years, making $83 billion in commercial and multifamily mortgage loans in 2018 and holding more than $500 billion in such loans on their balance sheets.

Last year, life insurance companies closed $28 billion in multifamily mortgages, making up about 10% of the total multifamily lending market and 34% of total life company commercial real estate lending.

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