Commercial, multifamily mortgage lending continue to run at record pace in Q3

by Candyd Mendoza12 Nov 2019

Low interest rates encouraged more consumers to take out commercial and multifamily mortgage loans in the third quarter, according to the Mortgage Bankers Association (MBA).

MBA’s quarterly survey showed that originations of commercial and multifamily mortgages rose 9% from Q2 and were 24% higher last year over year.

"Low interest rates are supporting strong levels of commercial and multifamily borrowing and lending," said Jamie Woodwell, vice president for commercial real estate research at MBA. "Through the third quarter, every major capital source is lending at a pace above last year's level.”

A rise in originations for healthcare, industrial, office, and multifamily properties drove the overall third-quarter increase in commercial and multifamily lending volumes, according to MBA.

Compared to the second quarter, originations for health care properties jumped 60%, while industrial properties increased 23% in the third quarter. Closing of mortgage loans for multifamily properties also climbed 14%, while lending for retail properties rose 13%. Office and hotel property lending, on the other hand, fell 9% and 22%, respectively, from last quarter.

On an annual basis, Q3 2019 saw a 239% spike in the dollar volume of loans for healthcare properties, a 42% gain for industrial properties, a 36% increase for office properties, and a 16% boost for multifamily properties. However, retail property loan originations dropped 2%, and hotel property lending plunged 20%.

“Loans backed by multifamily and industrial properties, and made for life companies and Fannie Mae and Freddie Mac, are all running at a record pace," Woodwell said. "The low-interest-rate environment should continue to support property values and encourage borrowing into 2020."