Commercial/multifamily lending sees sharp year-over-year decline

by Candyd Mendoza05 Nov 2020

The commercial/multifamily sector saw a 47% year-over-year decline in originations in the third quarter, according to the Mortgage Bankers Association.

"Borrowing and lending backed by commercial and multifamily mortgages remained subdued during the third quarter," said Jamie Woodwell, MBA's vice president of commercial real estate research.

Data from MBA's latest survey showed that originations in all property types fell in Q3 2020, with dollar volume of loans for hotel properties down by 94% year over year, retail properties down by 83%, office properties down by 58%, healthcare properties down by 51%, multifamily properties down by 31%, and industrial property loan originations down by 23%.

Among investor types, originations for commercial bank portfolio loans plunged by 68% year-over-year. There was also a 58% drop for commercial mortgage-backed securities (CMBS), a 55% decrease in life insurance company loans, and an 8% dip in the dollar volume of Fannie Mae and Freddie Mac loans.

"Every major property type and capital source recorded a decline compared to last year's third quarter,” Woodwell said. “Originations backed by industrial and multifamily properties saw smaller declines than other property types, with multifamily lending buoyed by loans made for Fannie Mae, Freddie Mac and FHA."

Quarter over quarter, commercial and multifamily mortgage loan originations were up 12%.