WASHINGTON, DC—Commercial and multifamily mortgage originations will be down 3% this year from 2016 levels, with a total of $478 billion by year's end, the Mortgage Bankers Association said late last week. The revised forecast comes a few months after MBA predicted a 3% year-over-year increase in originations to $515 billion, up from an estimated $502 billion last year.
“Commercial and multifamily market activity has downshifted at the start of 2017,” says Jamie Woodwell, VP of commercial real estate research at MBA. “Markets continue to move forward, but the rapid increases in property values, transaction volumes and other fundamentals that characterized the post-recession period have given way to more regular changes tied to the economy as well as changes in supply and demand. For many parts of the market, the downshift is a positive development.”
The multifamily segment of mortgage bankers' originations is now expected to reach $206 billion this year, with total multifamily lending at $245 billion. That compares to February's projections for the multifamily segment: $219 billion from mortgage bankers, and a total of $267 billion across the sector.
Commercial/multifamily mortgage debt outstanding is expected to continue to grow in 2017, ending the year roughly 2% higher than at the end of '16. One year-end milestone predicted by MBA in February has already come to pass: the association announced earlier this month that at the end of the first quarter, total commercial/multifamily mortgage debt outstanding had nudged past the $3-trillion mark for the first time.
Three of the four lender classes tracked by MBA increased their mortgage debt outstanding during Q1. The exception was CMBS, which declined 4.6% from Q4 '16. For the other three groups, the quarterly increase averaged 2.7%.
MBA's midyear revision of its originations forecast follows a similar slight downgrade at the midpoint of '16. At that time, MBA predicted that the volume of originations would be largely flat compared to 2015's record level of $504 billion; six months previously, the association had forecast a new record of $511 billion in commercial/multifamily mortgages for the year.
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