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Commercial/Multifamily Borrowing Up 20% Year-over-Year According to MBA

Bank CRE Loan Originations Down Significantly, but Non-Bank, CMBS, Agency Lenders More Than Making Up Difference
August 8, 2017
Commercial and multifamily mortgage loan originations during the second quarter of 2017 were 20% higher than during the same period last year and 28% higher than the first quarter of 2017, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

Among the second quarter's notable trends, borrowing backed by industrial properties increased by two-thirds over the first six months of 2017 compared to the first half of 2016, while borrowing backed by retail properties dropped by one-sixth, said Jamie Woodwell, MBA's vice president of commercial real estate research.

What's more, commercial/multifamily mortgage bankers' originations increased despite a smaller number of sales transactions, reflecting higher sale prices commanded by commercial property assets.

Analyzing real estate financing trends by property type, the MBA reported a larger number of loan originations for industrial and office properties led the overall increase in commercial/multifamily lending volumes compared to the second quarter of 2016.

Specifically, second-quarter dollar volume of loans for industrial properties posted a whopping 91% year-over-year increase. Quarterly loan volume for other property types included a 33% increase for office properties, a 21% increase for multifamily properties, a 14% increase for hotel properties, a 7% increase in health care property loans, and a 9% decrease in retail property loans.

Among investor types, government sponsored enterprises (GSEs - Fannie Mae and Freddie Mac) loans posted a sizable 26% year-over-year increase, a substantial amount given the loan volumes they handle. The biggest inicrease was by commercial mortgage backed securities (CMBS) loans which increased by 168% year-over-year, although CMBS still accounts for relatively low level of origination by dollar volume.

Loans originated by life insurers decreased 2% during the second quarter, while the biggest pullback was by commercial banks which saw a 21% decrease in dollar volume of portfolio loans.

Second quarter 2017 originations for hotel properties increased 139% compared to the first quarter 2017. There was a 39% increase in originations for industrial properties, a 39% increase for office properties, a 34% increase for retail properties, a 25% increase for multifamily properties, and a 34% decrease for health care properties from the first quarter 2017.

Among investor types, between the first and second quarter of 2017, the dollar volume of loans for CMBS increased 117%, loans for life insurance companies increased 25%, originations for GSEs increased 22%, and loans for commercial bank portfolios decreased by 5%.
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