MBA: 3Q Commercial/Multifamily Originations Slow

A pullback in lending activity across most property types contributed to a decline in total mortgage loan originations during the third quarter, according to the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

“Rising interest rates took some wind out of the market’s sails, with the 10-year Treasury yield starting the quarter at 2.87 percent and finishing at 3.05 percent, and the 2-year Treasury starting at 2.57 percent and ending at 2.81 percent,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “The [commercial mortgage-backed-securities] and bank lending markets were the hardest hit. Meanwhile, lending backed by multifamily properties and for the government-sponsored enterprises continued to grow.”

MBA said borrowing and lending backed by commercial and multifamily properties decreased 3 percent during the third quarter, and was 7 percent lower than a year ago.

A decline in third quarter originations for health care and retail properties led the overall decrease in commercial/multifamily borrowing volumes from a year ago. By property type, MBA reported a 55 percent year-over-year decrease in dollar volume of loans for health care properties; a 28 percent decrease for retail properties; a 19 percent decrease for hotel properties; and a 17 percent decrease for office properties. Originations increased for loans backed by multifamily and industrial properties (each by 19 percent).

Among investor types, dollar volume of loans originated during the third quarter for CMBS loans and commercial bank portfolio loans decreased from a year earlier, by 53 percent and 22 percent, respectively. Loan originations increased for life insurance companies, up 4 percent and the GSEs (Fannie Mae and Freddie Mac), up 3 percent.

Compared to the second quarter, third quarter originations for hotel properties decreased by 30 percent, originations for retail properties declined by 22 percent and originations for office properties saw an 18 percent decline. Originations of loans backed by health care properties increased by 18 percent, as did multifamily properties (13 percent). Industrial property loans were essentially unchanged.

Among investor types, between the second and third quarter of this year the dollar volume of loans for CMBS decreased by 47 percent, loans for commercial bank portfolios decreased by 10 percent, originations for life insurance companies decreased by 6 percent and GSE loans increased by 14 percent.

To view the report, click