Commercial and multifamily borrowing saw a 119% increase in the third quarter compared with a year ago and a quarter-over-quarter increase of 19%, according to the Mortgage Bankers Association (MBA).
For multifamily properties specifically, the MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations found that they experienced a 105% increase in lending volumes year over year in the third quarter. In addition, multifamily properties had a 31% increase quarter over quarter.
“Overall commercial real estate borrowing and lending are running at high levels, but there continues to be an important differentiation by property type,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Borrowing hit an all-time quarterly high during the third quarter, driven by strong or improving market fundamentals, higher property values, low interest rates, and solid mortgage performance. Borrowing and lending backed by industrial and multifamily properties are each running at a record annual pace.”
According to the MBA, all property types showed a year-over-year increase in the third quarter, including an 866% increase in the dollar volume of loans for hotel properties, a 317% increase for retail, a 156% increase for industrial, a 102% increase for office, and a 45% increase for health care loan originations. While year-to-date office and retail lending are each up significantly from 2020, Woodwell added that both remain below 2019 levels.
On a quarterly basis, third quarter originations increased 62% for retail compared with the second quarter, 60% for hotel, and 9% for office. Industrial properties were essentially unchanged, and health care property originations fell 52%.
“Among capital sources, nearly every major group—including commercial mortgage-backed securities (CMBS), banks, life companies, and investor-driven lenders—is lending well above 2020 levels, with life companies and investor-driven lenders also exceeding their 2019 year-to-date volumes,” said Woodwell. “The one exception is the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, whose conservator limited their loan purchase volumes this year.”
The dollar volume of loans originated for investor-driven lenders, including REITs, specialty finance, credit companies, and others, increased by 319% year over year. In addition, commercial bank portfolio loans saw a year-over-year boost of 232%, life insurance company loans saw a 175% increase, CMBS loans increased 125%, and GSE origination loans were up 15%.
Quarter over quarter, the dollar volume of loans in the third quarter for the GSEs increased 79%, with originations for commercial bank portfolios increasing 51% and life insurance companies increasing 3%. CMBS loans saw a 5% decline, and loans for investor-driven lenders decreased 6%.