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.
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.