U.S commercial and multifamily mortgage bankers will close a record $652 billion in loans backed by income-producing properties this year, an increase of 14% from last year’s record volume $574 billion, according to the Mortgage Bankers Association.
Total multifamily lending, which includes some loans made by small and midsize banks not captured in the overall total, is forecast to rise to $359 billion, which is also a record and is 6 percent higher than last year’s record total ($339 billion).
Commercial and multifamily mortgage loan originations increased by 10 percent year-over-year in the second quarter of 2019, and rose 29 percent from the first quarter of 2019.
MBA expects volumes will rise again in 2020, reaching $700 billion of commercial and multifamily mortgage bankers originations, and $390 billion of total multifamily lending.
”Low interest rates, strong demand for commercial and multifamily assets increased demand for mortgages”
“The low interest rate environment, coupled with continuously strong demand for commercial and multifamily assets, has pushed property values higher and increased demand for mortgages,” said Jamie Woodwell, MBA’s Vice President for Commercial Real Estate Research.
“At the beginning of the year, many economists, investors, and others anticipated long-terms rates would be around 3 percent and rising – potentially putting pressure on property values and decreasing demand for debt. Instead, the 10-year Treasury yield is at approximately 1.5 percent, and many market participants are planning for rates to remain ‘lower for longer.’ The result is heightened demand and higher volumes,” he added.
According to the MBA’s statement, banks lent considerably more in multifamily mortgages in 2018 than previous estimated, making more than $100 billion in multifamily loans.