ORLANDO—Despite all the uncertainty out there, originations of commercial and multifamily mortgages should be 7% higher in 2014 versus the prior year. The total volume will grow to $300 billion by year’s end, according to the Mortgage Bankers Association.
MBA yesterday, at its Commercial Real Estate Finance/Multifamily Housing Convention & Expo held here, that commercial/multifamily originations should continue to rise to $333 billion in 2016. Originations of 2014 multifamily mortgages are forecast at $116 billion.
This year will once again see fewer loans coming up against their maturities,said Jamie Woodwell, MBA vice president of commercial real estate research and an ALM/Real Estate Media Group editorial advisor. “But with still-low interest rates, improving property fundamentals, a rebound in property prices and higher loan maturity volumes on the horizon, we anticipate mortgage originations will continue to increase in 2014.”
The forecast said commercial/multifamily mortgage debt outstanding is expected to continue to grow in 2014, ending the year at nearly $2.6 trillion, more than 3% higher than at the end of 2013. By the end of 2016, mortgage debt outstanding is forecasted to approach $2.7 trillion.
That’s coming off of a strong 2013, which saw a 15% increase over 2012. By sector, originations for healthcare properties rose by 35%; office, 22%; multifamily, 13%; hotels 10%; and retail increased by 4%. Industrial property origination volume saw an 11% decline. Among investor types, loans for CMBS increased by 33% between 2012 and 2013; loans for commercial bank portfolios increased by 32%; and originations for life insurance companies increased by 25%. Meanwhile, loans for GSEs decreased by 18%.
“Commercial and multifamily mortgage borrowing and lending ended 2013 on a particularly strong note,” said Woodwell. “The fourth quarter marked the highest volume of mortgage originations since 2007, as all the major investor groups increased their activity. Initial indications are that 2013′s volume was up 15% from 2012, putting 2013 originations in the neighborhood of $280 billion in closed loans.”
Broken down, MBA found that originations rose by 34% between the third and the fourth quarters. Multifamily saw the greatest uptick in originations, at 44%. Retail came in second at 34%, hotels rose by 24%, industrial by 19%, healthcare by 19% and office property originations rose by 9%. Among investor types, loans for GSEs increased by 48%, commercial bank portfolios increased by 44%, CMBS rose 35% and loans for life insurance companies were up 8%.
Year over year, loan volume accumulated in the final three months of 2013 was 16% higher than the same period a year ago. The boost was driven by increases in originations for healthcare, retail and office properties, with respective increases of 70%, 43% and 27%. Originations for multifamily properties were flat; originations for hotels fell 9%; and industrial saw a 30% decline. Among investor types, dollar volume of loans originated for commercial bank portfolios increased by 54% from a year ago, including a 40% increase for life insurance companies, a 15% increase for CMBS and a 43% decrease in dollar volume of loans originated for Fannie Mae and Freddie Mac loans.
The MBA forecast projects commercial and multifamily mortgage origination volumes, the level of mortgage debt outstanding and loan maturity volumes. The detailed forecast is available to MBA commercial/multifamily regular, premium and select associate members free of charge. Non-members must pay an access fee. The detailed quarterly report is available now; MBA will release its Annual Origination Summation report for 2013, with final origination figures for the year, late next month.
Reprinted with permission from MBA NewsLink and the Mortgage Bankers Association.