Multifamily and CRE lending moves at a record-breaking pace

Despite a drop in multifamily loan volume, industrial, health care, office and retail originations pushed overall multifamily and commercial mortgage lending to unprecedented heights, according to the Mortgage Bankers Association.

Commercial and multifamily mortgage lending set a quarterly record in the last three months of 2019, growing 7% year-over-year and 15% from the third quarter. Origination dollar volume for the year is also expected to break the previous record of $574 billion in 2018. The MBA will release the final origination figures for 2019 in late March.

"Commercial and multifamily borrowing and lending hit a new high during the fourth quarter of 2019, surpassing the previous record from the second quarter of 2007," Jamie Woodwell, the MBA's vice president of commercial real estate research, said in a press release.

"A pullback in lending by Fannie Mae and Freddie Mac suppressed multifamily borrowing during the quarter, but growth for most other property types made up the difference. Initial indications are that 2019 set new records, with double-digit growth in mortgage bankers’ originations, as well as new highs in originations for banks and life insurance companies. Low interest rates and solid property fundamentals should help 2020 continue the trend of record borrowing and lending."

Industrial property loans jumped 67% annually by dollar volume in the fourth quarter. Health care properties had a 33% year-over-year increase, followed by 29% for office properties and 13% for retail. Multifamily lending fell 4% from the fourth quarter of 2018 while hotel property loans dropped 25%.

By investor type, commercial mortgage backed securities surged 81% year-over-year, while commercial bank portfolio loans increased 13% and life insurance companies’ originations grew by 9%. Government-sponsored enterprise dollar-volume totals decreased 30%.