Commercial/Multifamily Borrowing Increased 59 Percent In The Third Quarter Of 2024

Commercial and multifamily mortgage loan originations increased 59 percent in the third quarter of 2024 compared to a year ago, and increased 44 percent from the second quarter of 2024, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

“After a slow start to the year, borrowing and lending backed by commercial real estate properties picked up during the third quarter,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “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 percent in June to 3.72 percent in September.  Long-term rates have increased more recently, which could slow last quarter’s momentum.”    

Woodwell continued, “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.”

ORIGINATIONS INCREASED 59 PERCENT IN THE THIRD QUARTER OF 2024

Originations in the third quarter of 2024 varied across the different property types. There was a 510 percent year-over-year increase in the dollar volume of loans for health care properties, a 99 percent increase for hotel properties, an 82 percent increase for retail properties, a 57 percent increase for industrial properties, and a 56 percent increase for multifamily properties. Office property originations decreased 3 percent.

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

THIRD-QUARTER 2024 ORIGINATIONS UP 44 PERCENT FROM SECOND-QUARTER 2024

On a quarterly basis, in the third quarter of 2024 originations for health care properties increased 191 percent compared to the second quarter of 2024. There was a 56 percent increase in originations for retail properties, a 53 percent increase for multifamily properties, a 42 percent increase for office properties, and originations for industrial properties increased 21 percent. The dollar volume of loans for hotel properties decreased 25 percent.

Among investor types, between the second and third quarters of 2024, the dollar volume of loans for depositories increased 86 percent, loans for GSEs increased 55 percent, originations for life insurance companies increased 40 percent, loans for investor-driven lenders increased 21 percent, and the dollar volume of loans for CMBS increased by 12 percent.