A strong final three months of the year helped commercial and multifamily mortgage originations increase by three percent in 2018, according to preliminary estimates from the Mortgage Bankers Association’s (MBA) 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 Jamie Woodwell, MBA’s Vice President for Commercial Real Estate Research. “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.”
FOURTH QUARTER 2018 ORIGINATIONS UP 14 PERCENT COMPARED TO FOURTH QUARTER 2017
An increase in fourth quarter originations for healthcare, multifamily and industrial properties led the overall increase in commercial/multifamily lending volumes in the fourth quarter compared to the same quarter in 2017. The fourth quarter saw a 61 percent year-over-year increase in the dollar volume of loans for healthcare 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, the dollar volume of loans originated for the Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) increased year-over-year by 32 percent. There was a 22 percent increase for life insurance company loans and a five percent increase in commercial bank portfolio loans. The dollar volume of loans for Commercial Mortgage Backed Securities (CMBS) declined 35 percent.
FOURTH QUARTER 2018 ORIGINATIONS UP 33 PERCENT FROM THIRD QUARTER 2018
Compared to 2018’s third quarter, fourth quarter originations for health care properties jumped 155 percent. There was 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 compared to the third quarter of 2018.
Among investor types, between the third and fourth quarter of 2018, the dollar volume of loans for commercial bank portfolios increased 46 percent, 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 THREE PERCENT HIGHER THAN 2017
A preliminary measure of commercial and multifamily mortgage origination volumes shows that 2018 originations were three 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 were down 7 percent, retail properties declined 13 percent and healthcare properties decreased a 16 percent.
Among investor types, loans for the GSEs increased 16 percent between 2017 and 2018 and originations for life insurance companies increased 10 percent. Loans for commercial bank portfolios decreased 10 percent and loans for CMBS decreased 26 percent.
In late March, MBA will release its Annual Origination Summation report for 2018, with final origination figures for the year.