Commercial/multifamily off to uncertain start after strong 2016

by Ryan Smith12 Apr 2017
Commercial and multifamily mortgages had a strong year in 2016, but the space is off to an uncertain start in 2017, according to new data from the Mortgage Bankers Association.

Commercial and multifamily bankers closed $490.6 billion in loans last year, according to the MBA. That’s one of the strongest showings the space has had, said Jamie Woodwell, the MBA’s vice president for commercial real estate research.

“Last year was a strong year for commercial real estate finance,” Woodwell said. “For originations, 2016 was the third-highest year on record, after 2007 and 2015.”

Borrowing and lending on multifamily properties accounted for the largest share of the market in 2016, Woodwell said.

But while 2016 was strong, market uncertainty has made the beginning of 2017 a bit shakier.

“The post-election rise in interest rates has taken a bit of wind out of the sails of the transactions’ market in the first quarter of 2017,” Woodwell said. “The degree to which it and other potential market changes – such as tax-reform proposals, general economic growth, foreign investment, and consumer confidence – will affect borrowing and lending in 2017 is still to be seen.”

Commercial banks were the top investor group for whom loans were originated in 2016, according to the MBA, responsible for $157.4 billion of the total volume. Fannie Mae and Freddie Mac had the second-highest volume at $105.8 billion.

Multifamily properties saw the highest origination of any property type in the 2016 commercial/multifamily space ad $214.1 billion, followed by office buildings, retail properties, hotels and motels, industrial, and health care. According to the MBA, first liens accounted for 97% of the total dollar volume in the space.

The reported dollar volume of commercial/multifamily loans last year was 3% lower than the volume reported in 2015, according to the MBA.


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