Commercial, Multifamily Borrowing Up 1 Percent Annually in U.S.

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According to the Mortgage Bankers Association's latest Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, first quarter 2018 commercial and multifamily mortgage loan originations increased one percent compared to the same period last year and, in line with the seasonality of market, first quarter originations were thirty-three percent lower than the fourth quarter of 2017.

"Borrowing and lending backed by commercial real estate is starting 2018 at roughly the same pace at which it started 2017," said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research.  "The property types drawing the most attention of late continued to follow different paths, with retail originations declining while multifamily and industrial increased.  It was the strongest first quarter on record for originations of loans for life insurance companies and the GSEs, Fannie Mae and Freddie Mac."

First Quarter 2018 Originations Increased 1 Percent Compared to Q1 of 2017

A rise in originations for hotel, multifamily and industrial properties led the overall increase in commercial/multifamily lending volumes when compared to the first quarter of 2017. The first quarter saw a 54 percent year-over-year increase in the dollar volume of loans for hotel properties, an 18 percent increase for multifamily properties, a 14 percent increase for industrial properties, a one percent decrease for office properties, a 27 percent decrease in retail property loans, and a 39 percent decrease in health care property loans.

Among investor types, the dollar volume of loans originated for Commercial Mortgage Backed Securities (CMBS) increased by 12 percent year-over-year. Life insurance company loans increased 9 percent, Government Sponsored Enterprises (GSEs - Fannie Mae and Freddie Mac) increased 8 percent, and loans originated for commercial bank portfolios loans decreased 23 percent.

First Quarter 2018 Originations Down 33 Percent from Q4 2017

As is typical in comparisons of first quarter originations to fourth quarter originations, first quarter 2018 originations decreased 33 percent compared to the previous quarter. Among property types, hotel properties decreased 53 percent compared to the fourth quarter 2017. There was a 41 percent decrease in originations for health care properties, a 37 percent decrease for retail properties, a 32 percent decrease for office properties, a 28 percent decrease for multifamily properties, and a 13 percent decrease for industrial properties from the fourth quarter 2017.

Among investor types, between the fourth quarter 2017 and first quarter of 2018, the dollar volume of loans for CMBS decreased 47 percent, originations for GSEs decreased 35 percent, loans for commercial bank portfolios decreased by 34 percent, and loans for life insurance companies decreased 18 percent.