CRE firms expect solid lending activity in 2019, despite tough conditions

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Lagging construction, rising interest rates and the broader economy don't really bode well for buyers of commercial real estate, but most CRE lenders still expect originations to increase in 2019, according to the Mortgage Bankers Association.

About 55% of commercial and multifamily firms anticipate growth in loan originations this year, with 13% expecting an increase of 5% or more across the overall market, according to the MBA's Commercial Real Estate Finance Outlook Survey. When considering just their own institution's originations, this number rose to 38%.

"Mortgage bankers look to 2019 as another strong year for the commercial and multifamily mortgage markets," Jamie Woodwell, the MBA's vice president for research and economics, said in a press release. "The majority of top firms expect that strong appetites from both lenders and borrowers will drive commercial mortgage originations higher."

While expectations for originations have shifted somewhat downward from last year, only two in five commercial real estate lenders think originations will slow this year, and just one in 20 anticipate declining volume for their own firm.

About 83% of CRE lenders reported borrowers had "strong" or "very strong" appetites for new loans in 2018, and 78% expect those same attitudes this year.

While most commercial and multifamily firms anticipate strong lending activity in 2019, they shared mixed sentiments on how origination volumes for specific capital sources will evolve this year. Surveyors were divided on whether 2019 will bring increases or decreases in originations for commercial mortgage-backed securities and Fannie Mae and Freddie Mac, according to the MBA.

More institutions believe they'll see increases rather than decreases in originations for the following: bank portfolios, Federal Housing Administration loans, and life and pension companies.

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