Commercial/Multifamily Borrowing Declines 2% In Q1 Of 2020

Commercial and multifamily mortgage loan originations decreased 2 percent in the first quarter of 2020 compared to the same period last year, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. In line with seasonality trends, originations the first three months of the year were 40 percent lower than the fourth quarter of 2019.

“Commercial real estate finance markets were active during the first quarter – the start of what was expected to be another strong year of borrowing and lending,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “That strong start has been derailed by the coronavirus and our individual and collective responses to it. Early indications are that low interest rates continue to attract some property refinancing, but that overall transaction activity has fallen given the economic uncertainty stemming from the virus. Property investors and lenders have now turned more of their attention to their existing portfolios instead of new business opportunities.”

Originations decline 2 percent in the first quarter of 2020

Compared to the first quarter of 2019, a fall in originations for hotel, industrial and retail properties led this year’s overall first quarter decrease in commercial/multifamily lending volumes. By property type, hotels decreased by 42 percent, industrial decreased by 39 percent, and retail decreased by 37 percent. Office properties increased by 8 percent, multifamily increased by 15 percent, and health care properties increased 16 percent year-over-year.

Among investor types, the dollar volume of loans originated for life insurance companies decreased by 18 percent year-over-year. Commercial bank portfolios decreased 1 percent, while Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) increased 6 percent; and loans originated for Commercial Mortgage Backed Securities (CMBS) increased 14 percent.

First quarter originations fall 40 percent from the fourth quarter of 2019

As is typical in the first quarter, originations decreased in comparison to last year’s fourth quarter, with total activity falling 40 percent. Among property types, declines were seen in retail (62 percent), industrial (57 percent), hotel (57 percent), health care (55 percent), office space (42 percent), and multifamily properties (29 percent).

Among investor types, the dollar volume of loans for CMBS decreased 51 percent, originations for life insurance companies decreased 45 percent, loans for commercial banks decreased by 42 percent, and loans for GSEs decreased 14 percent.

To view the report, please visit: https://www.mba.org/Documents/Research/1Q20CMFOriginationsSurvey.pdf.