Top multifamily and commercial lenders generally are optimistic about their individual production growth but expect loan risk to increase and loan return to moderate, the Mortgage Bankers Association finds.
Ninety-one percent of these lenders expect origination to grow in 2014 and 48% anticipate an overall increase at least 5%. Sixty-four percent of individual companies forecast their own volumes will jump 5% or more.
“Commercial and multifamily lenders anticipate a market in which lending continues to grow and their firm gets a bigger piece of the pie,” said Jamie Woodwell, MBA’s VP for commercial real estate research in a press release Wednesday. “Borrowers’ appetites to take out new loans are expected to remain strong, but perhaps drop a bit from 2013 levels. The resulting competition to lend leads originators to expect loan risk to increase marginally in the face of moderating returns.”
Sixty-five percent of respondents anticipate a “very strong” appetite among firms to make loans and 23% anticipate a “very strong” appetite among borrowers to take out loans, the survey finds.
The percentage of respondents that forecast “medium” to “somewhat high” loan risk for this year is 89%, in contrast to 2013 when 88% of respondents characterized their loans as having “medium” to “somewhat low risk.”
Seventy-four percent expect loans to be “medium” return this year. Just 50% characterized their loans as “medium” return last year.
A majority of respondents expect originations for commercial mortgage-backed securities, commercial banks and life companies and pension funds to increase, and for originations for Fannie Mae, Freddie Mac and FHA to decrease, according to the MBA.