Bolstered by record-low interest rates, multifamily mortgage originations spiked 45% in the first quarter from year-ago levels, according to the Mortgage Bankers Association.
The rise in multifamily lending helped boost overall commercial and multifamily activity 36% from a year earlier, the MBA found in its quarterly survey.
From the fourth quarter, overall originations are down 12%, reflecting the industry’s usual push to finalize deals before the end of the year and subsequent dropoffs in first-quarter numbers. Multifamily lending fell 22% from the fourth quarter.
“Borrowing and lending on commercial and multifamily properties continues to rebound from the lows seen during the Great Recession,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “The low interest rates and stabilization in commercial real estate fundamentals that raised origination levels by 55% in 2011 are continuing to buoy activity in 2012.“
However, of the five major commercial property types, CMBS multifamily delinquencies are the highest, jumping to 15.18% in April, a trend that analytics firm Trepp calls an aberration.
And investors are eagerly snatching up Fannie Mae- and Freddie Mac-backed loans. The MBA found a 40% pickup in GSE loans bought by investors. Freddie recently issued its sixth $1 billion mortgage-backed security issuance backed by multifamily properties this year as homeownership slipped.
Increased lending for health care and retail properties also contributed to the 36% increase in commercial and multifamily originations in the first quarter. Loans for health care properties rocketed 118%, while retail properties shot up 109%. Lending in industrial and office properties rose 32% and 9%, respectively.
Commercial loan origination volumes for the GSEs and the Federal Housing Administration hit new records in 2011, with the multifamily segment leading the growth. The three financiers accounted for $57.6 billion of all the activity in the segment, by far the biggest chunk of the market.
Click on the image below for the quarterly results of the MBA's survey of mortgage originations.