U.S. Commercial Mortgage Origination Volumes Mixed in Q1

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According to the Mortgage Bankers Association's Quarterly Survey of Commercial-Multifamily Mortgage Bankers Originations, first quarter 2016 commercial and multifamily mortgage loan originations overall were essentially flat compared to the same period last year and first quarter originations were thirty-eight percent lower than the fourth quarter of 2015 in line with the seasonality of market.

"In the aggregate, commercial real estate borrowing and lending started 2016 in a similarly strong fashion to 2015," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "Borrowing backed by retail, office, hotel and multifamily properties picked up, as did lending by banks. Disruptions in the broader capital markets pushed originations for commercial mortgage-backed securities (CMBS) down.  Across property types and investor types, changes in regulation and broader market conditions could have an impact on originations during the remainder of the year."

A rise in originations for retail and office properties led the overall increase in commercial/multifamily lending volumes when compared to the first quarter of 2015.  The first quarter saw a 44 percent year-over-year increase in the dollar volume of loans for retail properties, an 18 percent increase for office properties, a 2 percent increase for multifamily properties, a 3 percent increase for hotel properties, a 56 percent decrease in industrial property loans, and a 57 percent decrease in health care property loans.

Among investor types, the dollar volume of loans originated for commercial bank portfolio loans increased by 44 percent year-over-year.  There was a 1 percent year-over-year decrease for life insurance company loans, a 19 percent decrease in the dollar volume of Commercial Mortgage Backed Securities (CMBS) loans, and a 22 percent decrease in Government Sponsored Enterprises (GSEs - Fannie Mae and Freddie Mac) loans.

In line with the seasonality of the market, first quarter 2016 originations for health care properties decreased 62 percent compared to the fourth quarter 2015.  There was a 57 percent decrease in originations for hotel properties, a 57 percent decrease for industrial properties, a 46 percent decrease for retail properties, a 39 percent decrease for multifamily properties, and a 23 percent decrease for office properties from the fourth quarter 2015.

Among investor types, between the fourth quarter 2015 and first quarter of 2016, the dollar volume of loans for GSEs decreased 45 percent, loans for commercial bank portfolios decreased 39 percent, originations for life insurance companies decreased 32 percent, and loans for CMBS decreased by 29 percent.