Daenin Arnee

Commercial and multifamily mortgage loan originations declined 53% year over year in the second quarter; however, they increased 23% from the first quarter, according to the Mortgage Bankers Association (MBA).

“Commercial real estate borrowing and lending remained subdued in the second quarter of 2023,” said Jamie Woodwell, MBA’s head of commercial real estate research. “Origination volumes picked up from the first quarter but were less than half the level of a very strong quarter a year earlier. Higher interest rates, uncertainty about property values, and questions about some property fundamentals are all contributing to the slowdown.”

Woodwell added that the MBA expects the logjam to start to break in the coming quarter; however, the path forward will depend on where interest rates and other aspects of the economy head.

Year over year, the MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Banks Originations found that multifamily mortgage loan originations experienced a 48% decrease. In addition, the dollar amount of loans for other commercial real estate segments saw declines: health care properties by 74%; office properties by 66%; industrial properties as well as retail properties by 55%; and hotel properties by 32%.

Among investor types year over year, the dollar volume of loans originated for depositories decreased 69%. Investor-driven lenders saw a 60% decrease, while life insurance companies experienced a 49% decline. Commercial mortgage-backed securities (CMBS) saw a 23% decrease in dollar volume, and the dollar volume of Fannie Mae and Freddie Mac loans was down 11%.

Second-quarter originations for multifamily experienced a 37% increase over the first quarter. In addition, originations for health care properties rose 44% increase, followed by industrial and office properties with 19% and 16% increases, respectively. However, originations for retail and hotel properties dropped quarter over quarter 13% and 27%, respectively.

Quarter over quarter, the dollar volume of loans for life insurance picked up 95%; loans for investor-driven lenders increased 46%; and Fannie Mae and Freddie Mac originations rose 22%. The dollar volume of loans for depositories saw a 4% increase, while CMBS loans decreased by 8%.