MBA Forecast: 2020 Commercial/Multifamily Lending Down 34% from 2019 Record Volumes

Commercial and multifamily mortgage bankers are expected to close $395 billion of loans backed by income-producing properties in 2020, a 34 percent decline from 2019’s record $601 billion, according to a new Mortgage Bankers Association forecast.

Total multifamily lending alone, which includes some loans made by small and midsize banks not captured in the overall total, is forecast to fall by 21 percent to $288 billion in 2020 from last year’s record $364 billion. MBA anticipates a slight increase in lending volumes in 2021, with activity rising to $407 billion in commercial/multifamily mortgage bankers originations and $305 billion in total multifamily lending.

“There remains a great deal of uncertainty about the pandemic and its impacts on the economy and commercial real estate, with significant differences across property types and capital sources,” said Jamie Woodwell, MBA Vice President for Commercial Real Estate Research. “The downturn is putting downward pressure on some property incomes, particularly property types most impacted by the pandemic or with shorter lease terms. With low interest rates and investment yields, property values are likely to hold up better, which should help put a floor under sales and originations volumes this year and next.”

Woodwell noted through the first three quarters of 2020, multifamily sales volume was 41% lower than a year earlier, with multifamily originations down just 17%. “The strong level of refinance activity of multifamily mortgages, particularly into Fannie Mae, Freddie Mac and FHA loans, is lifting overall originations activity from where it might otherwise be, and is driving differences between property types and capital sources. These contrasts are likely to remain pronounced,” he said.

For additional commentary from Woodwell on MBA’s commercial/multifamily forecast and the pandemic’s impact on the sector, visit MBA’s Commercial/Multifamily Market Intelligence Blog.

MBA’s commercial/multifamily members can download a copy of MBA’s latest Commercial/Multifamily Real Estate Finance Forecast at www.mba.org/crefresearch.