Year-over-Year Commercial Mortgage Originations Down in Q4

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Ali Ahmad
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2016, 2015 Totals Essentially Even

WASHINGTON, D.C. (February 20, 2017) - Commercial and multifamily mortgage originations increased 20 percent between the third and the fourth quarters of 2016, and were down seven percent compared to the fourth quarter of 2015, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. MBA's commercial/multifamily mortgage bankers' originations index provides a preliminary estimate that originations for the full year 2016 were one percent lower than in 2015.

"Commercial and multifamily mortgage borrowing and lending ended 2016 on a strong note, but not quite as strong as 2015," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "As a result, mortgage origination volumes for 2016 as a whole appear to have come in at roughly the same level as 2015.  Preliminary numbers show that 2016 lending by Fannie Mae and Freddie Mac, bank portfolios and life insurance companies were all at or above previous record levels."

FOURTH QUARTER 2016 ORIGINATIONS DOWN SEVEN PERCENT COMPARED TO FOURTH QUARTER 2015

A decrease in originations for hotel, health care, and retail properties led the overall decline in commercial/multifamily lending volumes when compared to the fourth quarter of 2015.  The fourth quarter saw a 39 percent year-over-year decrease in the dollar volume of loans for hotel properties, a 24 percent decrease for health care properties, a 19 percent decrease for retail properties, a 4 percent decrease for industrial properties, a one percent decrease in multifamily property loans, and a 6 percent increase in office property loans.

Among investor types, the dollar volume of loans originated for commercial bank portfolios decreased by 17 percent year-over-year.  There was a 6 percent year-over-year decline for life insurance company loans, a 2 percent decrease in Commercial Mortgage Backed Securities (CMBS) loans, and a 4 percent increase in the dollar volume of Government Sponsored Enterprises (GSEs - Fannie Mae and Freddie Mac) loans.

FOURTH QUARTER 2016 ORIGINATIONS UP TWENTY PERCENT FROM THIRD QUARTER 2016

Fourth quarter 2016 originations for health care properties increased 122 percent compared to the third quarter 2016.  There was a 103 percent increase in originations for hotel properties, an 82 percent increase for industrial properties, a 21 percent increase for retail properties, a 16 percent increase for multifamily properties, and a 10 percent increase for office properties from the third quarter 2016.

Among investor types, between the third and fourth quarter of 2016, the dollar volume of loans for commercial bank portfolios increased 37 percent, loans for life insurance companies increased 13 percent, originations for GSEs increased 8 percent, and loans for CMBS increased by 5 percent.

PRELIMINARY 2016 ORIGINATIONS ONE PERCENT LOWER THAN 2015

A preliminary measure of commercial and multifamily mortgage origination volumes shows 2016 originations one percent lower than during 2015. Compared to 2015, originations for health care properties decreased 49 percent. There was a 23 percent decrease for hotel properties, a 16 percent decrease for industrial properties, a 10 percent decrease for retail properties, a 6 percent increase for office properties, and a 6 percent increase for multifamily properties.

Among investor types, 2016 versus 2015, loans for CMBS decreased 15 percent, originations for life insurance companies were flat, loans for commercial bank portfolios increased 6 percent and loans for GSEs increased 10 percent in 2016 versus 2015.

In late March, MBA will release its Annual Origination Summation report for 2016 with final origination figures for the year.

To view the report, please visit the following link: https://www.mba.org/Documents/Research/4Q16CMFOriginationsSurvey.pdf