Commercial and multifamily borrowing is off to a slow start in 2024. Mortgage loan originations for commercial and multifamily were unchanged in the first quarter compared with the same period in 2023 and decreased 23% from the fourth quarter, according to data from the Mortgage Bankers Association (MBA).
“Borrowing and lending backed by commercial real estate properties remained muted in the first quarter of 2024,” said Jamie Woodwell, MBA’s head of commercial real estate research. “Elevated interest rates and uncertainty about their direction have kept many current owners on the fence, with little commending a sale or refinance unless something forces the issue.”
Woodwell added that loan maturities and other triggers are increasingly likely to prompt action. “Property owners, potential owners, lenders, and others are all working through the specifics of each individual property to identify the level of mortgage debt that property can support,” he said. “New loan originations should follow as this continues.”
According to the MBA Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, year-over-year borrowing in the first quarter varied across property types. Year over year, multifamily properties saw a 7% decrease in the dollar volume of loans. Retail properties experienced a 31% drop in the dollar volume of loans; health care properties, a 22% decrease; and office properties, a 21% decline. However, industrial and hotel property originations both saw increases of 63% and 8%, respectively.
Among investor types, dollar volume of loans originated for depositories declined 41% year over year in the first quarter, followed by a 17% decrease for government-sponsored enterprises Fannie Mae and Freddie Mac. However, commercial mortgage-backed securities (CMBS) saw a 93% jump in dollar volume, followed by investor-driven lender loans with a 45% increase and life insurance company loans with a 35% bump.
Quarter over quarter, multifamily property originations declined 29% in the first quarter. Other property types also saw declines in originations: health care properties, 56%; retail properties, 49%; hotel properties, 37%; and office properties, 3%. Only the dollar volume of loans for industrial properties saw an increase of 12%.
Among investor types between the first quarter and fourth quarter, most saw decreases, except for CMBS, which saw a 57% increase in dollar volume of loans. The range of origination declines included: life insurance companies, down 37%; depositories, down 36%; GSEs, down 30%; and investor-driven lenders, down 18%.
