MBA Survey: Life Insurance Cos. Could Fund Additional $10B in Multifamily Lending in 2020

Life insurance companies could increase their multifamily lending volumes by $10 billion in 2020 from 2018 volumes, the Mortgage Bankers Association reported.

In terms of portfolio holdings, life companies MBA surveyed indicated they desire to hold between $50 billion and $120 billion more in loans backed by multifamily properties on their balance sheets over the next five years.

“Life insurance companies report a strong appetite to make multifamily loans,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “The $10 billion in additional multifamily lending they seek would correspond to an over 30 percent increase in their multifamily lending volumes and account for roughly three percent of the total multifamily lending market (based on 2018 figures).”

At the request of its members, MBA surveyed life insurance companies about their capacity to make portfolio loans backed by multifamily properties. Life insurance companies are a significant source of mortgage debt for commercial and multifamily property owners and have grown increasingly active in recent years, making $83 billion in commercial and multifamily mortgage loans last year and holding more than $500 billion in such loans on their balance sheets. Last year, life insurance companies closed $28 billion in multifamily mortgages, nearly 10 percent of the total multifamily lending market and 34 percent of total life company commercial real estate lending.

MBA conducted the survey during August and September. It collected information from 28 life insurance companies that held $289 billion of commercial and multifamily mortgages at the end of 2018, more than half of all life company-held commercial/multifamily mortgage debt. Respondents reported closing $15 billion in multifamily mortgages last year, 52 percent of the total multifamily lending done by life companies last year.

Full survey findings are posted here.