MBA: Second Quarter Commercial/Multifamily Borrowing Falls 48 Percent

Commercial and multifamily mortgage loan originations fell by 48 percent in the second quarter from a year ago and declined by 31 percent from the first quarter, the Mortgage Bankers Association reported this morning in its Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

“Commercial real estate borrowing and lending slowed dramatically in the second quarter, as uncertainty around the COVID-19 pandemic caused both borrowers and lenders to focus more of their attention on their existing books of business instead of new opportunities,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell.

Woodwell noted the originations picture shows a “marked divide” between properties that were the most dramatically and immediately hit by the pandemic–lodging and retail–and those that have fared better–multifamily and industrial. “Refinancing in government-backed loans has shown the greatest resilience,” he said.    

Originations Decrease 48 Percent in Second Quarter

All property types showed a decline in the second quarter in commercial/multifamily lending volumes when compared to the second quarter of 2019. The second quarter saw a 91 percent year-over-year decrease in the dollar volume of loans for hotel properties, a 74 percent decrease for retail properties, a 71 percent decrease for office properties, a 44 percent decline for industrial properties, a 40 percent decrease in health care properties, and a 24 percent decrease for multifamily property loan originations.

Among investor types, the dollar volume of loans originated for commercial mortgage-backed securities decreased by 95 percent year-over-year. There was a 55 percent decrease for commercial bank portfolio loans, a 49 percent decrease in life insurance company loans, and a 5 percent decrease in the dollar volume of Government-Sponsored Enterprises (Fannie Mae and Freddie Mac) loans.

Second Quarter Originations Down 31 Percent From First Quarter

On a quarterly basis, second quarter originations for hotel properties decreased 83 percent compared to the first quarter 2020. There was a 56 percent decrease in originations for office properties, a 53 percent decrease for retail properties, a 32 percent decrease for industrial properties, a 17 percent decrease for health care properties, and originations for multifamily properties declined 13 percent.

Among investor types, between the first and second quarter of this year, the dollar volume of loans for CMBS decreased 94 percent, loans for commercial bank portfolios decreased 38 percent, and originations for life insurance companies decreased 33 percent. Only the dollar volume of loans for GSEs increased last quarter, by 25 percent.

To view the report, visit: https://www.mba.org/Documents/Research/2Q20CMFOriginationsSurvey.pdf.