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Commercial/Multifamily Originations Drop Sharply

Commercial and multifamily mortgage loan originations continued to fall on a year-over-year basis in the second quarter, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. Second quarter originations were 63% lower than during the same period last year. Conduits for commercial mortgage-backed securities (CMBS) registered a 98% drop compared with the same period last year.

“The slowdown in originations has come from both a decrease in the supply of capital available and a decrease in the demand for new mortgages,” says Jamie Woodwell, MBA's vice president of commercial/multifamily real estate research. “It is likely volumes will remain muted until buyers, sellers, borrowers, lenders and their expectations of rates and terms match closely enough for transaction activity to pick back up."

The drop in lending activity is evident across all property types. Loans for hotel properties dropped 87% in the second quarter compared with the same period last year. Loans for office properties dropped 65%, retail declined 63%, industrial fell 57% and multifamily property loans fell 42%. Health care loans also experienced a 66% decline.

Among investor types, conduits for CMBS saw the largest decline hitting the lowest level since the MBA bean the survey in 2001. There was also a 29% drop in commercial bank portfolio loans and a 27% decline in loans for life insurance companies. Meanwhile, Government Sponsored Enterprises — Fannie Mae and Freddie Mac — saw an increase of 66%, the highest recorded for a March through June period.

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