Commercial and Multifamily Mortgage Loan Originations Soar in Q3

On Friday, the Mortgage Bankers Association released the results of its Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. Commercial and multifamily mortgage loan originations in Q3 increased 59% year-over-year and 44% when compared to Q2.

Originations in Q3 varied across the different property types. There was a 510% year-over-year increase in the dollar volume of loans for health care properties, a 99% increase for hotel properties, an 82% increase for retail properties, a 57% increase for industrial properties, and a 56% for multifamily properties. Office property originations declined 3%.

Among investor types, the dollar volume of loans originated for commercial mortgage-backed securities (CMBS) increased by 260% year-over-year. There was a 69% increase for depository loans, a 62% increase for investor-driven lender loans, a 31% increase in loans for life insurance companies, and a 28% increase for government sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) loans.

Adding background and analysis to the report, MBA Head of Commercial Real Estate Research Jamie Woodwell said:

“After a slow start to the year, borrowing and lending backed by commercial real estate properties picked up during the third quarter. Lower interest rates were a key driver of the increase, with the yield on the Ten-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.

Each property and loan is unique and faces a different situation depending on its property type, market, submarket, vintage, business plan, and more. All those factors will play a role in the volume of borrowing/lending in coming quarters.”