Commercial and multifamily mortgage originations jumped 36% in the third quarter from a year earlier, marking five straight quarters of growth as property values stabilized and borrowers refinanced maturing loans, according to the Mortgage Bankers Association.
Office properties, a sector many investors had written off, attracted the strongest lending growth as borrowers refinanced debt and bet on stabilizing valuations. Office originations soared 181% on an annual basis, according to the banking association’s quarterly survey.
Retail property lending doubled with a 100% increase, while hotel originations climbed 66% and multifamily lending rose 27%. The dollar volume index of commercial real estate loans reached its highest level since early 2023, increasing 18% from the second quarter.
The lending rebound signals renewed confidence in commercial real estate after the sector faced headwinds from rising interest rates and remote work concerns.
"Lending activity increased across most major property types and capital sources," Reggie Booker, the MBA's associate vice president of commercial and multifamily research, said in a statement. “While some sectors, such as health care and industrial saw slower activity, overall volumes reflected improving sentiment as property values stabilized and loans reaching maturity were refinanced.”
The surge in originations suggests lenders see opportunity where others saw risk.
Among investor types, the dollar volume of loans originated for investor-driven lenders increased by 83% year over year.
There was a 52% increase in loans for bank lenders, a 40% increase from multifamily lenders Fannie Mae and Freddie Mac, and a 5% increase in commercial mortgage-backed securities. Life insurance companies bucked the trend, posting a 4% decrease in originations.
The survey tracks originations from commercial and multifamily mortgage banking firms nationwide.