Commercial and multifamily mortgage originations slowed dramatically in the second quarter, as both borrowers and lenders shifted their focus to other investments due to the economic uncertainty caused by COVID-19.
Borrowing and lending for commercial and multifamily properties were 48% lower in Q2 2020 than a year ago, and down 31% quarter over quarter, according to the Mortgage Bankers Association's new survey.
"The originations picture shows a marked divide between properties that were the most dramatically and immediately hit by the pandemic (lodging and retail) and those that have fared better (multifamily and industrial). Refinancing in government-backed loans has shown the greatest resilience," said Jamie Woodwell, vice president of commercial real estate research at MBA.
By property types, hotel properties saw a 91% year-over-year plunge in loan dollar volume, a 74% decrease for retail properties, a 71% drop for office properties, a 44% decline for industrial properties, a 40% drop in healthcare properties, and a 24% decrease for multifamily property loan originations.
Among investor types, the dollar volume of loans originated for commercial mortgage-backed securities plummeted by 95% year over year. Commercial bank portfolio loans posted a 55% cut, followed closely by life insurance company loans, with a 49% decrease. Meanwhile, loans backed by Fannie Mae or Freddie Mac only saw a 5% drop in dollar volume.