MBA: 1Q Commercial, Multifamily Borrowing Declines 14 Percent

Commercial and multifamily mortgage loan originations decreased 14 percent in the first quarter from a year ago, according to the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

In line with seasonality trends, originations during the first three months of the year were 37 percent lower than the fourth quarter of 2020.

“Borrowing and lending backed by commercial and multifamily properties was lower than last year’s first quarter, but the 14 percent decline was smaller than the year-over-year drops seen at the height of the pandemic-induced economic slowdown,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “Industrial and multifamily properties continue to attract the greatest interest, and retail and hotels saw the largest declines.”

Woodwell noted investors and lenders “should have greater clarity into which pandemic-led changes are temporary and which are more permanent” as the economic recovery and re-opening speeds up.

FIRST-QUARTER ORIGINATIONS DECREASED 14 PERCENT FROM YEAR AGO

Compared to a year earlier, a fall in originations for hotel, retail and office properties led the overall decrease in commercial/multifamily lending volumes. By property type, hotels decreased by 82 percent, retail decreased by 45 percent, office decreased by 34 percent and multifamily properties decreased by 5 percent. Health care lending increased by 5 percent and industrial properties increased by 66 percent.

Among investor types, dollar volume of loans originated for depositories decreased by 48 percent year-over-year. Commercial mortgage-backed securities decreased 26 percent, life insurance company portfolios decreased 15 percent and government-sponsored enterprises (Fannie Mae and Freddie Mac) decreased 9 percent.

FIRST-QUARTER ORIGINATIONS DOWN 37 PERCENT FROM FOURTH-QUARTER

As is typical in the first quarter, originations decreased in comparison to the prior year’s fourth quarter, with total activity falling 37 percent. Among property types, declines were seen in hotel (64 percent), health care (46 percent), multifamily (41 percent), industrial (38 percent), retail (25 percent) and office space (11 percent).

Among investor types, the dollar volume of loans for GSEs decreased 58 percent, loans for depositories decreased 50 percent and originations for life insurance companies decreased 31 percent. Loans for CMBS remained unchanged.

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