2018 Ends on a High Note with a 14 Percent Rise in Commercial/Multifamily Borrowing

MBA NewsLink Staff

February 11, 2019


SAN DIEGO--A strong final three months of the year helped commercial and multifamily mortgage originations increase by 3 percent in 2018, according to preliminary estimates from the Mortgage Bankers Association's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released here today at the 2019 Commercial Real Estate Finance/Multifamily Housing Convention & Expo.

"2018 ended on a strong note for commercial mortgage borrowing and lending, with fourth quarter originations 14 percent higher than a year earlier, despite the broader market volatility," said MBA Vice President for Commercial Real Estate Research Jamie Woodwell. "Investor and lender interest in multifamily and industrial properties continues to drive transaction volumes while questions about retail and office property markets have slowed activity for those property types. The market as a whole ended the year roughly flat compared to 2017, continuing a plateau we've seen in mortgage borrowing and lending since 2015."

4Q Originations up 14% from Year Ago
An increase in fourth quarter originations for health care, multifamily and industrial properties led the overall increase in commercial/multifamily lending volumes in the fourth quarter compared a year ago. MBA reported a 61 percent year-over-year increase in dollar volume of loans for health care properties, a 32 percent increase for multifamily properties, a 28 percent increase for industrial properties and a slight increase (one percent) for retail properties. Originations decreased for hotel property loans (4 percent) and office property loans (3 percent).

Among investor types, dollar volume of loans originated for the government-sponsored enterprises (Fannie Mae and Freddie Mac) increased year-over-year by 32 percent. MBA reported a 22 percent increase for life insurance company loans and a 5 percent increase in commercial bank portfolio loans. The dollar volume of loans for commercial mortgage-backed securities declined by 35 percent.

4Q Originations Up 33% from 3Q
Compared to the third quarter, fourth quarter originations for health care properties jumped by 155 percent. MBA reported a 56 percent increase in originations for hotel properties, a 34 percent increase for industrial properties, a 30 percent increase for multifamily properties, a 29 percent increase for office properties and an 11 percent increase for retail properties.

Among investor types, dollar volume of loans for commercial bank portfolios increased 46 percent in the third quarter, loans for the GSEs increased 32 percent, originations for CMBS increased 31 percent and loans for life insurance companies increased by 30 percent.

Preliminary 2018 Originations 3% Higher from 2017
A preliminary analysis of commercial and multifamily mortgage origination volumes shows 2018 originations were 3 percent higher than 2017. By property type, originations for multifamily properties increased 22 percent, originations for industrial properties rose 12 percent and originations climbed 5 percent for hotel properties. Office property originations fell by 7 percent, retail properties declined by 13 percent and health care properties decreased by 16 percent.

Among investor types, loans for the GSEs increased by 16 percent between 2017 and 2018 and originations for life insurance companies increased by 10 percent. Loans for commercial bank portfolios decreased by 10 percent and loans for CMBS decreased by 26 percent.

In late March, MBA will release its Annual Origination Summation report for 2018, with final origination figures for the year.

To view the report, visit: https://www.mba.org/Documents/Research/4Q18CMFOriginationsSurvey.pdf.

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