The Mortgage Bankers Association’s (MBA) quarterly survey of commercial/multifamily mortgage bankers originations showed borrowing in this space increased dramatically in the third quarter of 2021.
Commercial and multifamily mortgage loan originations during the third quarter of 2021 were 119 percent higher year-over-year and 19 percent higher compared with the second quarter of 2020. In a year-over-year analysis, all property types showed an increase.
“Overall commercial real estate borrowing and lending are running at high levels, but there continues to be an important differentiation by property type,” Jamie Woodwell, MBA vice president of commercial real estate research, said in a release. “Borrowing hit an all-time quarterly high during the third quarter, driven by strong or improving market fundamentals, higher property values, low interest rates, and solid mortgage performance. Borrowing and lending backed by industrial and multifamily properties are each running at a record annual pace. And while year-to-date office and retail lending are each up significantly from last year, both remain below 2019 levels.
“Among capital sources, nearly every major group – including CMBS [commercial mortgage-backed securities], banks, life companies and investor-driven lenders – is lending well above 2020 levels, with life companies and investor-driven lenders also exceeding their 2019 year-to-date volumes. The one exception is the GSEs (Fannie Mae and Freddie Mac), whose conservator limited their loan purchase volumes this year.”
By property type, hotels saw an 866 percent year-over-year increase in the dollar volume of loans, retail properties saw a 317 percent increase, industrial properties saw a 156 percent increase, multifamily properties saw a 105 percent increase, office properties a 102 percent increase, and health care properties a 45 percent increase.
When broken down by investor types, investor-driven lenders (real estate investment trusts, specialty finance, credit companies and other) saw an increase of 319 percent year-over-year. Commercial bank portfolio loans saw a 232 percent increase over the same period, life insurance company loans a 175 percent increase, CMBS saw a 125 percent increase, and GSEs saw a 15 percent increase.
When looking at the changes on a quarter-to-quarter basis, retail properties saw an increase of 62 percent in originations compared with the second quarter of 2021, hotel properties an increase of 60 percent, multifamily properties an increase of 31 percent, and office properties an increase of 9 percent. Industrial properties remained essentially unchanged, and originations for health care properties decreased 52 percent.
For investor types, GSEs saw an increase of 79 percent in the dollar volume of loans quarter-over-quarter, commercial banks’ portfolios increased 51 percent, and originations for life insurance companies increased 3 percent. Loans for CMBS decreased 5 percent, and loans for investor-driven lenders decreased 6 percent.