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“The delinquency rate for mortgages backed by commercial and multifamily properties remained low at the end of the third quarter. For example, the share of bank-held CRE loan balances that were delinquent has only been lower once–just before the onset of the COVID-19 pandemic–in the series’ 30-year history.”

–Jamie Woodwell, MBA Head of Commercial Real Estate Research.

MBA: 3Q Commercial/Multifamily Borrowing Declines 13 Percent

Commercial and multifamily mortgage loan originations decreased 13 percent in the third quarter from a year ago, according to the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

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“After a strong first half of the year, rising interest and capitalization rates began to affect deal volume during the third quarter. Increasing yields across investment alternatives–including the 10-Year Treasury yield more than doubling during the first nine months of the year–have shifted property financing and values, and it will take time for the market to fully absorb these changes. Volatility has been equally impactful, making the sizing of transactions extremely difficult. The result has been the first of what may be many quarters of depressed borrowing and lending activity.”
—-Jamie Woodwell, MBA Head of Commercial Real Estate Research.

Institutional Real Estate Returns Shrink in Q3

The National Council of Real Estate Investment Fiduciaries reported institutional-quality commercial real estate returned 0.57% in the third quarter, down from 3.24% in the second quarter.

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“Commercial and multifamily mortgages continued to perform well through the third quarter. A much smaller share of loans backed by the property types hardest hit at the onset of the pandemic–lodging and retail–were delinquent. For those property types, very few new loans faced difficulties and lenders continued to work through those that had. Additionally, loans backed by property types that have been performing well throughout the pandemic including multifamily, industrial and office continued to see few delinquencies.”
–Jamie Woodwell, MBA Vice President of Commercial Real Estate Research.

MBA White Paper: Office Market ‘Likely Changed Forever’

The ongoing tug of war between employers and employees about returning to the office will accelerate as pandemic-related impacts fade, according to a new Mortgage Bankers Association white paper.