Commercial, Multifamily Borrowing Climbed to Record High in U.S.

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"Commercial and multifamily borrowing and lending hit a new high during the fourth quarter of 2019, surpassing the previous record from the second quarter of 2007," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "A pullback in lending by Fannie Mae and Freddie Mac suppressed multifamily borrowing during the quarter, but growth for most other property types made up the difference. Initial indications are that 2019 set new records, with double-digit growth in mortgage bankers originations, as well as new highs in originations for banks and life insurance companies."

Added Woodwell, "Low interest rates and solid property fundamentals should help 2020 continue the trend of record borrowing and lending."

Originations climb 7 Percent in the fourth quarter of 2019

A rise in originations for industrial, office and health care properties led the overall increase in commercial/multifamily lending volumes when compared to the fourth quarter of 2018. There was a 67 percent year-over-year increase in the dollar volume of loans for industrial properties, a 33 percent increase for health care properties, a 29 percent increase for office properties, and a 13 percent increase for retail properties. Multifamily property loan originations decreased 4 percent, and hotel property lending fell 25 percent.

Among investor types, the dollar volume of loans originated for Commercial Mortgage Backed Securities (CMBS) increased year-over-year by 81 percent, 13 percent for commercial bank portfolio loans, and 9 percent for life insurance companies. The dollar volume of Government Sponsored Enterprises (GSEs - Fannie Mae and Freddie Mac) loans decreased 30 percent compared to the fourth quarter of 2018.

Fourth quarter originations up 15 percent from third quarter of 2019

On a quarterly basis, fourth quarter originations for industrial properties increased 58 percent compared to the third quarter of 2019. There was a 46 percent increase in originations for hotel properties, a 29 percent increase for retail properties, a 22 percent increase for office properties, and a 7 percent increase for multifamily properties. Originations for health care properties were unchanged from the third quarter.

Among investor types, between the third and fourth quarter of 2019, the dollar volume of loans for CMBS increased 56 percent, loans for life insurance companies increased 33 percent, originations for commercial bank portfolios increased 14 percent, while loans for the GSEs decreased by 17 percent.

2019 preliminary measure of originations indicate a 13 percent increase from 2018

A preliminary measure of commercial and multifamily mortgage originations volumes shows activity in 2019 was 13 percent higher than in 2018. By property type, originations for health care properties increased 92 percent from 2018, 50 percent for industrial properties, 23 percent for office properties, and 8 percent for multifamily properties. Retail property originations decreased 6 percent, and hotel properties saw a decline of 19 percent.

Among investor types, 2019 versus 2018, loans for CMBS increased 24 percent, originations for commercial bank portfolios increased 20 percent, and loans for life insurance companies increased five percent. GSE loans decreased 1 percent.