Commercial and multifamily mortgage originations and multifamily lending are set to reach new record highs in both 2019 and 2020.
The Mortgage Bankers Association forecasts that commercial and multifamily mortgage bankers will close a record $652 billion of loans backed by income-producing properties this year, 14% more than the previous record set in 2018.
"The low interest rate environment, coupled with continuously strong demand for commercial and multifamily assets, has pushed property values higher and increased demand for mortgages," said Jamie Woodwell, MBA's Vice President for Commercial Real Estate Research.
There will also be a new record for multifamily lending which is expected to beat out last year’s figure by 6% to reach $359 billion. This includes some loans made by small and midsize banks not captured in the overall total.
"At the beginning of the year, many economists, investors, and others anticipated long-terms rates would be around 3% and rising - potentially putting pressure on property values and decreasing demand for debt. Instead, the 10-year Treasury yield is at approximately 1.5%, and many market participants are planning for rates to remain 'lower for longer.' The result is heightened demand and higher volumes."
New records expected in 2020
But the records are not forecast to stand for long with 2020 expected to see new highs of $700 billion of commercial/multifamily mortgage bankers originations, and $390 billion of total multifamily lending.