Commercial Mortgage Originations Ended 2017 on a High Note

The level of commercial and multifamily mortgage originations during 2017 was up 15 percent from the previous year, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. For the fourth quarter of 2017, originations were up by nine percent increase in originations over the third quarter and up by 10 percent from the fourth quarter of 2016.

 

By the end of 2017 originations for hotel properties increased 26 percent from one year earlier, while industrial properties saw a 22 percent increase, multifamily properties saw a 17 percent increase for multifamily properties, office properties enjoyed a 12 percent increase and health care properties totaled a nine percent increase for healthcare properties. The one year-over-year downside in 2017 was the 21 percent decrease for retail properties. Among investor types, loans for commercial mortgage-backed securities (CMBS) increased 43 percent year-over-year in 2017 and originations for government-sponsored enterprise (GSE) loans increased 23 percent. But loans for commercial bank portfolios decreased one percent and loans for life insurance companies decreased two percent in 2017 versus 2016.

 

The MBA also reported a 40 percent year-over-year increase in the dollar volume of loans for hotel properties in the fourth quarter, as well as a 16 percent increase for multifamily properties, and a seven percent increase for office properties. However, the fourth quarter also saw a 17 percent decrease for industrial properties, a 36 percent decrease in health care property loans, and a 40 percent decrease in retail property loans. Among investor types, the dollar volume of loans originated for CMBS increased by 27 percent year-over-year in the fourth quarter, as well as a 17 percent year-over-year increase for GSE loans. But there was also a 4 percent decrease in life insurance company loans and a 5 percent decrease in the dollar volume of commercial bank portfolio loans.

 

For 2018, the MPBA is projecting $549 billion in commercial originations at $549 billion, down three percent from the 2017 volumes. Multifamily mortgages alone are being projected at $248 billion in 2018, with total multifamily lending at $271 billion.

 

“Based on these preliminary numbers, 2017 was a record year for borrowing and lending backed by commercial real estate properties,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The increase was driven by multifamily lending, particularly for Fannie Mae and Freddie Mac, coupled with overall growth in originations for commercial mortgage-backed securities and other capital sources. Entering 2018, there continues to be strong interest to lend by just about every major capital source.”

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