Commercial and Multifamily Borrowing Sees 72% Year-Over-Year Increase in Q1

Commercial and multifamily mortgage loan originations rose 72% in the first quarter compared with a year ago but were 39% lower than the prior three months, according to the Mortgage Bankers Association.

For multifamily properties specifically, the MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations found that they experienced a 57% year-over-year increase in lending volumes and a 41% decrease quarter over quarter, which is typical for the first quarter.

“The strong momentum in commercial and multifamily borrowing and lending at the end of 2021 carried into the first quarter,” said Jamie Woodwell, MBA vice president of commercial real estate research. “The continued growth in lending activity is the result of the ongoing strong demand for certain property types like industrial and multifamily, as well as renewed interest in other property types that saw more dramatic declines during the early stages of the pandemic, such as hotel and retail.”

Compared with the first quarter of 2021, an increase in originations for hotel, industrial, and retail properties led the overall year-over-year jump in commercial and multifamily lending volumes. Hotels experienced a whopping 359% increase, while industrial rose by 145%, retail increased by 88%, health care properties increased by 81%, and office saw a 30% boost.

Among investor types, according to the MBA, the dollar volume of loans originated for depositories climbed 195% year over year in the first quarter, followed by life insurance company portfolios at 81%, investor-driven lenders at 77%, commercial mortgage-backed securities (CMBS) at 56%, and government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac at 1%.

Quarter over quarter, declines were seen across the board, except for a 17% increase for health care properties. Office properties dropped 48%, hotels by 38%, retail by 32%, and industrial by 29%. The dollar volume of loans for CMBS decreased 61% for the first quarter, followed by GSE originations with a 39% drop, investor-driven lenders with a 30% decrease, and life insurance company loans with a 23% decline.

“It’s likely that the rise in interest rates will take some wind out of the sails of borrowing in upcoming quarters, but strong market fundamentals, property values, and investor interest should continue to support the market,” added Woodwell.

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