Commercial loans flat, but lending habits tell different story

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Commercial and multifamily loan originations may not be up by much from a year ago, but borrowing and lending behaviors were drastically different in the first quarter.

Commercial and multifamily loan originations rose 1% year-over-year in the first quarter, and declined 33% from the previous quarter, which was on target for the seasonality of the market, according to the Mortgage Bankers Association.

For the same period last year, borrowing habits showed a shift toward hotel, multifamily and industrial properties.

"Borrowing and lending backed by commercial real estate is starting 2018 at roughly the same pace at which it started 2017," Jamie Woodwell, MBA vice president of commercial real estate research, said in a press release.

"The property types drawing the most attention of late continued to follow different paths, with retail originations declining while multifamily and industrial increased."

Loan originations for hotel properties saw a 54% annual increase in dollar volume, while multifamily properties showed an 18% jump in dollar volume. Industrial property loan originations also grew year-over-year, with dollar volume rising 14%.

Originations for retail and health care property loans told a different story; retail property loan originations fell 27% annually in the first quarter, while health care property loan originations dropped 39%.

By investor type, 2018 "[had] the strongest first quarter on record for originations of loans for life insurance companies and the GSEs, Fannie Mae and Freddie Mac," according to Woodwell.

The dollar volume for life insurance company loan originations grew 9%, and increased 8% for government-sponsored enterprises loan originations.

Loan originations for commercial mortgage-backed securities also saw a 12% rise in dollar volume, while commercial bank portfolio loan originations saw dollar volume decline 23%.

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Commercial lending Commercial mortgages Multifamily CRE CMBS GSEs Mortgage Bankers Association