MBA: Commercial/Multifamily Borrowing Hits New High to Close Out 2019

SAN DIEGO–A 7 percent increase in commercial and multifamily mortgage originations in the fourth quarter capped off a strong 2019 for the market, according to preliminary estimates from the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

“Commercial and multifamily borrowing and lending hit a new high during the fourth quarter of 2019, surpassing the previous record from the second quarter of 2007,” said Jamie Woodwell, MBAs Vice President of Commercial Real Estate Research, here at the MBA 2020 Commercial Real Estate Finance/Multifamily Housing Convention & Expo.. “A pullback in lending by Fannie Mae and Freddie Mac suppressed multifamily borrowing during the quarter, but growth for most other property types made up the difference. Initial indications are that 2019 set new records, with double-digit growth in mortgage bankers originations, as well as new highs in originations for banks and life insurance companies.”

Woodwell noted low interest rates and solid property fundamentals “should help 2020 continue the trend of record borrowing and lending.”

Q4 Originations Climb 7 Percent

A rise in originations for industrial, office and health care properties led the overall increase in commercial/multifamily lending volumes compared to a year ago. MBA reported a 67 percent year-over-year increase in dollar volume of loans for industrial properties, a 33 percent increase for health care properties, a 29 percent increase for office properties and a 13 percent increase for retail properties. Multifamily property loan originations decreased by 4 percent, while hotel property lending fell 25 percent. 

Among investor types, dollar volume of loans originated for commercial mortgage-backed securities increased year-over-year by 81 percent, by 13 percent for commercial bank portfolio loans, and by 9 percent for life insurance companies. Dollar volume of government-sponsored enterprise (Fannie Mae and Freddie Mac) loans decreased by 30 percent from a year ago.

4Q Originations Up 15% from 3Q

Fourth quarter originations for industrial properties increased by 58 percent from the third quarter. MBA reported a 46 percent increase in originations for hotel properties, a 29 percent increase for retail properties, a 22 percent increase for office properties and a 7 percent increase for multifamily properties. Originations for health care properties were unchanged.

Among investor types, dollar volume of loans for CMBS increased 56 percent; loans for life insurance companies increased 33 percent; and originations for commercial bank portfolios increased 14 percent; while loans for the GSEs decreased by 17 percent.

2019 Originations Up 13%

A preliminary measure of commercial and multifamily mortgage originations volumes shows activity in 2019 was 13 percent higher than in 2018. By property type, originations for health care properties increased by 92 percent, by 50 percent for industrial properties, by 23 percent for office properties and by 8 percent for multifamily properties. Retail property originations decreased by 6 percent, while hotel properties saw a decline of 19 percent.

Among investor types, loans for CMBS increased by 24 percent in 2019 from 2018; originations for commercial bank portfolios increased by 20 percent; and loans for life insurance companies increased by 5 percent. GSE loans decreased by 1 percent.

To view the full Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations report, click https://www.mba.org/Documents/Research/4Q19CMFOriginationsSurvey.pdf.  

In late March, MBA will release its Annual Origination Summation report for 2019 with final origination figures for the year.