Commercial and multifamily loan originations were up 59% year over year in the third quarter and up 44% over the prior quarter, according to the Mortgage Bankers Association’s (MBA’s) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
“After a slow start to the year, borrowing and lending backed by commercial real estate properties picked up during the third quarter,” said Jamie Woodwell, MBA’s head of commercial real estate research. “Lower interest rates were a key driver of the increase, with the yield on the 10-year Treasury bond dropping during the quarter from an average of 4.31% in June to 3.72% in September. Long-term rates have increased more recently, which could slow last quarter’s momentum.”
Year over year, originations were up 56% for multifamily properties. In addition, health care properties saw a 510% year-over-year increase in dollar volume of loans, followed by a 99% increase for hotel properties, and an 82% increase for retail properties, and a 57% increase for industrial properties. Office property originations declined by 3%.
Among investor types, commercial mortgage-backed securities (CMBS) saw a 260% year-over-year increase for the dollar volume of loans. Depository loans saw a 69% increase, while investor-driven lender loans saw a 62% bump. In addition, loans for life insurance companies jumped 31%, and government-sponsored enterprise (GSE) loans saw a 28% increase.
Quarter over quarter, originations for multifamily properties increased 53% in the third quarter. Originations for health care properties saw a 191% increase from the second quarter, while office properties and industrial properties saw 42% and 21% increases, respectively. The dollar volume of loans for hotel properties dropped 25%.
Quarter over quarter, the dollar volume of loans for depositories increased 86% in the third quarter. The dollar volume of GSE loans increased 55% from the prior quarter, while originations for life insurance companies increased 40%, investor-driven lenders increased 21%, and CMBS increased 12%.
“Each property and loan are unique and face a different situation depending on its property type, market, submarket, vintage, business plan, and more,” added Woodwell. “All those factors will play a role in the volume of borrowing/lending in coming quarters.”
