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Commercial and Multifamily Originations Lead to Strong 2016 Finish

The mortgage industry saw a jump of 20% in commercial and multifamily originations between the third and fourth quarters of 2016, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. The survey also indicated that Q4 originations were down 7% year-over-year. However, initial estimates show that originations for the full year 2016 were only 1% lower than in 2015.

“Commercial and multifamily mortgage borrowing and lending ended 2016 on a strong note, but not quite as strong as 2015,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, “As a result, mortgage origination volumes for 2016 as a whole appear to have come in at roughly the same level as 2015. Preliminary numbers show that 2016 lending by Fannie Mae and Freddie Mac, bank portfolios and life insurance companies were all at or above previous record levels.”

The rise between the third and fourth quarters of 2016 was led by an originations increase of 122 percent for health care properties. Hotel property originations increased 103%, industrial properties saw a jump of 82% and retail property originations rose 21%. A 16% increase in multifamily originations rounded out the top five.

MBA has projected that commercial and multifamily originations will increase to $515 billion in 2017, up 3% from 2016’s estimated $502 billion.

“Nationally, commercial real estate fundamentals and prices remain strong,” according to Woodwell. “That overall strength is expected to continue to support active sales and mortgage markets. Rising interest rates are likely to take a bit of wind out of the market, but even so, modest increases in originations should bring 2017 to record levels of borrowing and lending for commercial, and particularly multifamily, properties.”

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