In the third quarter, commercial and multifamily mortgage
loan originations plummeted 49 percent compared with the same period last year,
according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of
Commercial/Multifamily Mortgage Bankers Originations.
MBA Head of Commercial Real Estate Research Jamie Woodwell
noted the drop in originations was not limited to any one type of property. On
a quarterly basis, some loan types have shown signs of recovery.
“Borrowing backed by commercial real estate (CRE) properties
declined again in the third quarter,” Woodwell said in a press release. “Borrowing
and lending were down for every property type and capital source from one year
ago. However, compared to this year’s second quarter, volumes were more stable,
and some sectors – including industrial properties and life company lenders –
showed an uptick in volume.”
He further noted achieving greater market certainty will be
essential to overcoming the slowdown.
“Year-to-date CRE mortgage borrowing has fallen 44 percent,
driven by questions about some properties’ fundamentals, uncertainty about
property values, and higher and volatile interest rates,” Woodwell said. “Greater
certainty around those conditions is a key prerequisite to breaking the logjam
of transaction activity.”
Health care properties have been hit hardest, accounting for
a 76 percent decrease in originations. Hotel properties are second with a 52
percent decrease, followed closely by retail properties (51 percent),
multifamily properties (50 percent, office loans (49 percent) and industrial
properties (35 percent).
Depositories have seen a staggering 73 percent
year-over-year drop in the dollar volume of originated loans, according to data
reported by MBA. Investor-driven lenders also have seen a notable drop
year-over-year, marked by a 55 percent reduction in origination dollar volume,
and loans by the government-sponsored enterprises (GSEs) have decreased by 27
percent.
Fairing much better, but still down, are loans originated by
commercial mortgage-backed securities (CMBS), which have dropped by only 5
percent year-over-year, followed by life insurance companies, which saw a 4
percent decrease in their dollar volume.
On a quarterly basis, the third quarter saw health care
property originations decrease by 28 percent compared with the second quarter.
Retail property originations are down by 20 percent, while multifamily property
originations dipped by 16 percent, according to MBA.
Not all property types have seen declines from the second
quarter to the third. Hotel properties are up 2 percent in originations, representing
a 4 percent increase for office properties, and there was a significant 36
percent increase in originations for industrial properties.
Comparing the second and third quarters among different
investor types, loans for CMBS decreased by 21 percent, loans for depositories
decreased by 19 percent, originations for investor-driven lenders decreased by
13 percent, and loans for GSEs decreased by 4 percent. In contrast, loans from
life insurance companies increased by 18 percent.