Variety in the types of multifamily loan originations helped to power a $5 billion lending increase between 2005 and 2006, according to the Washington, D.C.-based Mortgage Bankers Association's 2006 Annual Report on Multifamily Lending, released in November 2007. “There is a broad diversity of capital sources between the capital markets, the commercial banks, the GSEs, and the life companies—just a wide variety of different cap sources providing mortgage debt to multifamily owners,” explains Jamie Woodwell, the study's author and senior director of commercial and multifamily research at the MBA. “With the diversity of capital, you have different lenders able to step up investment activity in different economic situations. It is a real strength of the market.”
The report found that multifamily lending grew by 4 percent—from $133 billion in closed loans in 2005 to $138 billion in 2006, based on 50,959 loan originations. “One of the more surprising and underreported [findings] is that 26 percent of all active multifamily lenders did just one loan,” Woodwell says. “flat number jumps out at me and shows that there is still a very segmented market. You have a relatively small number of lenders that do [a lot of] large loans, and then a relatively large number of smaller lenders that do [a few] smaller loans.”
While the MBA eschews forecasting, Woodwell believes diversity will continue to play a role in supporting an overall solid lending environment, particularly in light of multifamily business dynamics. “One of the things we hear a lot in the lending arena is the idea of getting back to basics,” Woodwell says. “Overall, we have extremely strong loan performance, and strong property fundamentals that bode well for the market.”
