MBA: 2016 Commercial/Multifamily Originations Down 3%

Commercial and multifamily mortgage bankers closed $490.6 billion of loans in 2016, down by 3 percent from 2015’s record volume but still the third-highest year on record, the Mortgage Bankers Association reported this morning.

The MBA 2016 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation said commercial banks led investor groups in 2016 loan originations, with $157.4 billion. Fannie Mae and Freddie Mac came next, with $105.8 billion, followed by life insurance companies and pension funds, commercial mortgage-backed securities issuers and real estate investment trusts, mortgage REITs and investment funds.

“Last year was a strong year for commercial real estate finance,” said MBA Vice President for Commercial Real Estate Research Jamie Woodwell. “For originations, 2016 was the third highest year on record, after 2007 and 2015. Borrowing and lending backed by multifamily properties made up the largest share of the market and Fannie Mae and Freddie Mac drove much of that activity.”

Woodwell noted the post-election rise in interest rates has “taken a bit of wind out of the sails” of the transactions’ market in the first quarter. “The degree to which it and other potential market changes–such as tax reform proposals, general economic growth, foreign investment and consumer confidence–will affect borrowing and lending in 2017 is still to be seen,” he said.

The report said for property types, multifamily properties saw the highest origination volume, $214.1 billion, followed by office buildings, retail properties, hospitality, industrial and health care. First liens accounted for 97 percent of total dollar volume closed.

MBA said among repeat participants in the survey, dollar volume of closed loans declined by 1 percent.

For a copy of the report, visit the MBA Online Store, https://store.mortgagebankers.org/ProductDetail.aspx?product_code=EC6-300058-RP-I.