MBA data points to major changes in lending volumes in 2020
The coronavirus recession continues to take a toll on the commercial and multifamily market, according to the Mortgage Bankers Association.
In a new report, MBA forecasted that commercial and multifamily lending will plummet 34% in 2020, down from the last year's record volume of $601 billion to just $395 billion this year.
"There remains a great deal of uncertainty about the pandemic and its impacts on the economy and commercial real estate, with significant differences across property types and capital sources," said Jamie Woodwell, vice president for commercial real estate research at MBA. "The downturn is putting downward pressure on some property incomes, particularly property types most impacted by the pandemic or with shorter lease terms. With low-interest rates and investment yields, property values are likely to hold up better, which should help put a floor under sales and originations volumes this year and next."
MBA's forecast revealed that total multifamily borrowing alone will likely see a year-over-year decline of 21%, falling from $364 billion to $288 billion.
However, MBA expects the downturn to improve slightly in 2021, with lending activity climbing to $407 billion in commercial/multifamily mortgage bankers originations and $305 billion in total multifamily borrowing.
"Through the first three quarters of 2020, multifamily sales volume was 41% lower than a year earlier, with multifamily originations down just 17%. The strong level of refinance activity of multifamily mortgages, particularly into Fannie Mae, Freddie Mac and FHA loans, is lifting overall originations activity from where it might otherwise be, and is driving differences between property types and capital sources. These contrasts are likely to remain pronounced," Woodwell said.