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Commercial and Multifamily Mortgage Debt Increases in Third Quarter

As 2016 approaches, mortgage brokers should note that the commercial mortgage industry continues to grow and presents many opportunities for increasing their income.

Commercial and multifamily mortgage debt outstanding rose by $38 billion in the third quarter of 2015, according to the Mortgage Bankers Association. This marks a 1.4% increase from the previous quarter. As of the end of the third quarter, commercial and multifamily debt stands at $2.76 trillion. Multifamily debt outstanding alone rose to $1.02 trillion, an increase of $19.3 billion or 1.9% from the previous quarter. You might remember our blog post last year about how the third quarter of 2014 also experienced increases in commercial originations.

“Commercial and multifamily mortgage debt continued to climb in the third quarter, driven by increases in the dollar amount of loans held in bank portfolios,” according to Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Banks accounted for 85% of the total increase, adding $32 billion to their holdings of commercial real estate loans, the largest amount since the series began in 2007.”

With commercial real estate transaction volume approaching levels last seen in 2007 and a market fueled by foreign investment, the boom is unlikely to peter out, according to Mortgage Professional America. Even considering the Fed’s December 16 decision to increase its benchmark rate, the growth in this sector isn’t likely to be stymied, according to industry observer Brian Ward who serves as president of Capital Markets with Colliers International.

“The liquidity is not going away anytime soon, and it’s pointed right at the United States, whether it be U.S. investors themselves or foreign investors,” said Ward.

According to Mortgage Professional America, official figures show sizeable growth in the multifamily, industrial and hotel sectors this year from investors. Ward stated that the continued growth and recovery of the U.S. economy is a major selling point of the commercial real estate market.

As the commercial mortgage industry continues its impressive growth, brokers would do well to consider all of the possibilities the sector presents, including the small-balance commercial mortgage industry. Closing these mortgages is simple, quick and allows brokers to expand their business and their income.

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