SAN DIEGO—One-quarter of commercial and multifamily loans that were set to mature this year no longer exist to mature, which bodes well for the industry, said the Mortgage Bankers Association's commercial/multifamily economist Jamie Woodwell during the CREF15 conference here yesterday, where 3,100 attendees gathered to learn more about the state of commercial real estate finance. During the event, Woodwell and Mike Fratantoni, MBA chief economist, gave a commercial/multifamily forecast and media briefing on the current state of the market.

Fratantoni said the Fed is not likely to raise interest rates until closer to September of this year, and “we expect a slower rate of increase in the next couple of years.” He added that we're in a “strange environment” economically, with the domestic picture brightening and concern abroad.

Woodwell said we're in a “tight apartment market” with the number of multifamily loan originations increasing. Originations last year broker records, yet delinquency rates are lower than ever as the loans are performing well. In fact, one-quarter of the loans set to mature this year no longer exist. “This sets the tone for the market overall.”

Both Fratantoni and Woodwell said recent low oil prices, while resulting in job loss in Houston, are ultimately a plus for the country as a whole due to the ripple effect of lower gas prices on the economy. While oil prices may rise back to the mid-$50s per barrel, the price is “not where we were,” which is a “positive” and “very much to the US benefit.”

The MBA projects originations of commercial and multifamily mortgages will grow to $414 billion in 2015, an increase of 7% from 2014 volumes, and continue to rise to $430 billion in 2016. Multifamily mortgages originated by mortgage bankers are forecast to be $152 billion in 2015.

Originations increased 27% between the third and fourth quarters of 2014 and were up 11% compared to the fourth quarter of 2013, according to the organization. “The fourth quarter set record quarterly origination volumes for life-insurance companies, for Fannie Mae and Freddie Mac and for multifamily lending,” says Woodwell. “With low interest rates, rising property values and improving property fundamentals—and in spite of a significant drop in the volume of loans maturing during the year—the preliminary numbers show every major investor group increased commercial and multifamily lending in 2014.”

Also, commercial/multifamily mortgage debt outstanding is expected to continue to grow this year, ending the year at $2.7 trillion, more than 3% higher than at the end of 2014, according to MBA. Despite many of the loans that were expected to mature this year disappearing, 8% or $121 billion of $1.5 trillion of outstanding commercial and multifamily mortgages held by non-bank lenders and investors will mature in 2015, a 32% increase from $91.7 billion that matured in 2014. Maturities will grow to $223 billion in 2016, according to the organization.