MBA Predicts a One-Third Drop in Commercial and Multifamily Loan Volume for 2020
With originations down in the second and third quarters on a year-over-year basis, although up 12% in Q3 compared to Q2, it stands to reason that the Mortgage Bankers Association is predicting that volume for commercial and multifamily mortgages will be down for the year.
MBA said this week that commercial and multifamily mortgage bankers are expected to close $395 billion of loans backed by income-producing properties in 2020, a 34% decline from 2019’s record volume of $601 billion. That compares to the 9% increase in originations predicted by the organization at the start of this year.
Total multifamily lending alone, which includes some loans made by small and midsize banks not captured in the overall total, is forecast to fall 21% to $288 billion in 2020 from last year’s record total of $364 billion. MBA anticipates a slight increase in lending volumes in 2021, with activity rising to $407 billion in commercial/multifamily mortgage bankers’ originations and $305 billion in total multifamily lending.
“There remains a great deal of uncertainty about the pandemic and its impacts on the economy and commercial real estate, with significant differences across property types and capital sources,” said Jamie Woodwell, VP for commercial real estate research.
He added, “The downturn is putting downward pressure on some property incomes, particularly property types most impacted by the pandemic or with shorter lease terms. With low interest rates and investment yields, property values are likely to hold up better, which should help put a floor under sales and originations volumes this year and next.”
Woodwell noted that through the first three quarters of 2020, multifamily sales volume was 41% lower than a year earlier, with multifamily originations down just 17%.
“The strong level of refinance activity of multifamily mortgages, particularly into Fannie Mae, Freddie Mac and FHA loans, is lifting overall originations activity from where it might otherwise be, and is driving differences between property types and capital sources,” he said. “These contrasts are likely to remain pronounced.”
For comments, questions or concerns, please contact Paul Bubny
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