Fourth quarter 2018 originations for commercial and multifamily mortgages were up 14 percent on a year-over-year basis, according to new data from the Mortgage Bankers Association (MBA).
On an annualized measurement, the final three months of last year saw a 61 percent year increase in the dollar volume of loans for healthcare properties, a 32 percent increase for multifamily properties, a 28 percent increase for industrial properties and a one percent uptick for retail properties. Two property types saw originations declines in the fourth quarter: Hotel property loans (four percent) and office property loans (three percent).
Among investor types, the dollar volume of loans originated for the government-sponsored enterprises (GSEs) increased year-over-year by 32 percent, while life insurance loans saw a 22 percent increase for life insurance company loans and commercial bank portfolio loans saw a five percent rise. But the dollar volume of loans for commercial mortgage-backed securities (CMBS) sank by 35 percent.
“The year 2018 ended on a strong note for commercial mortgage borrowing and lending, with fourth quarter originations 14 percent higher than a year earlier, despite the broader market volatility,” said Jamie Woodwell, MBA’s Vice President for Commercial Real Estate Research. “Investor and lender interest in multifamily and industrial properties continues to drive transaction volumes while questions about retail and office property markets have slowed activity for those property types. The market as a whole ended the year roughly flat compared to 2017, continuing a plateau we’ve seen in mortgage borrowing and lending since 2015.”
Looking ahead, the MBA forecast that $110.5 billion of the $1.9 trillion of outstanding commercial and multifamily mortgages held by non-bank lenders and investors, a six percent share, will mature this year, while loan maturities this year will rise eight percent from the $102.2 billion that matured in 2018.
“The upcoming roll of commercial and multifamily mortgage maturities is relatively stable, after seven years of instability,” said Woodwell. “Many commercial and multifamily mortgages have 10-year terms, and a decade ago, the Great Recession meant fewer new loans were being made. As a result, 2018 and 2019 loan maturity volumes have been smaller than would otherwise be the case. However, a sizable share of shorter-term loans financed in the last few years have made up the difference.”
The MBA also released its annual ranking commercial and multifamily mortgage servicers’ volumes. For 2018, Wells Fargo Bank topped the list with $675.3 billion in master and primary servicing in 2018, followed by PNC Real Estate/Midland Loan Services ($612.4 billion), KeyBank National Association ($256.6 billion), Berkadia Commercial Mortgage LLC ($235.9 billion) and CBRE Loan Services ($189.4 billion).