Multifamily and commercial grow despite declines in three sectors

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Mortgages originated to finance apartments and other income-producing properties managed to generate a small year-to-year increase in the first half, even though there are declines in some parts of the market.

A 2% year-to-date increase puts commercial and multifamily mortgage originations on track to at least match 2017's volume, in line with the Mortgage Bankers Association's projections.

"Commercial and multifamily real estate borrowing and lending continue to track with last year's level," Jamie Woodwell, the MBA's vice president for commercial real estate research, said in a press release. "Investor demand for multifamily properties and hotels are helping push originations higher."

Hotel originations are up 31% year-to-date and multifamily loans are up 17%. Fannie Mae and Freddie Mac are supporting multifamily with a 14% increase in activity over last year through the first half. While certain multifamily submarkets could experience moderation, multifamily overall is expected to continue to see strong demand through year-end and into early 2019, according to a separate midyear forecast by Freddie Mac.

Industrial originations are on par with last year, according to the MBA. But there are declines in the following sectors: office (3%), retail (11%) and health care (30%).

Like the government-sponsored enterprises, life insurance companies are more active as investors this year. But while life insurer activity is up 7%, in the commercial bank sector it is down by 12% and in the commercial mortgage-backed securities conduit sector it is down by 2%.

Commercial and multifamily originations have increased in two of the past three years. Volume remained unchanged in 2016. In 2017, volume rose 20% year-over-year and 2015 it was up 29%.

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CRE Originations GSEs CMBS Mortgage Bankers Association Fannie Mae Freddie Mac