Commercial and multifamily mortgage bankers closed a record $600.6 billion of loans in 2019, according to the Mortgage Bankers Association’s (MBA) 2019 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation.
Commercial bank portfolios were the leading capital source for originated loans in 2019, responsible for $179.8 billion of the total. The government sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) had the second highest volume at $139.1 billion, followed by commercial mortgage-backed securities issuers (CMBS), life insurance companies and pension funds, and REITS, mortgage REITS and investment funds.
In terms of property types, multifamily properties had the highest volume of mortgage bankers’ origination volume at $287.2 billion, followed by office buildings, industrial properties, retail, hotels/motels, and health care. First liens accounted for 94 percent of the total dollar volume closed last year.
“2019 was a record year for commercial and multifamily mortgage originations – the third year in a row and likely the last of that string,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Every capital source had a strong appetite to place money, and property fundamentals, values and interest rates all provided considerable tailwinds for borrowing and lending, which carried into the start of this year.”
Added Woodwell, “That momentum was halted by the spread of the coronavirus, which has slowed borrower demand and challenged lenders’ ability to underwrite and fund many property loans. Base interest rates are extremely attractive, and new loans are still being quoted and closed, but credit spreads have increased and there are fewer lenders providing quotes. With the markets adjusting day-to-day and hour-to-hour, how this year’s borrowing and lending compares to 2019 will depend on the duration of the pandemic and how quickly the economy bounces back.”
The reported dollar volume of commercial and multifamily mortgages closed in 2019 was 5 percent higher than the volume reported in 2018. Among repeat participants in the survey, the dollar volume of closed loans increased by 12 percent.