Multi-Family Belle of the Commercial Lending Ball

Commercial and multifamily mortgage originations jumped 36 percent in the second quarter of 2013 compared to the first quarter and were up 7 percent from the same period in 2012.   The Mortgage Bankers Association said that originations were strong for most property types with the multifamily sector up 22 percent, originations for office properties increasing 75 percent, retail lending up 48 percent, industrial 44 percent and hotel originations surging by 89 percent.  Only the health care sector lagged; it was unchanged from a lackluster first quarter.

On a year-over-year basis however, multifamily lending was the star of the show, increasing 31 percent from the second quarter of 2012.  Office and Industrial lending were unchanged over this period, retail was down 14 percent and health care originations dropped 36 percent.  Hotel properties was the only other sector in positive territory with an increase in lending year-over-year of 3 percent. 

"Commercial and multifamily mortgage lending and borrowing continued to grow during the second quarter," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "The apartment market continues to be the belle of the ball, with multifamily mortgage originations running 31 percent ahead of last year's first half total. And after a slow start to the year, lending by life insurance companies surged in the second quarter to record the highest quarterly volume on record for that sector."

As Woodwell said, life insurance companies made the strongest showing of the various investor types.  Lending there was up by 16 percent compared to the same quarter in 2012 and doubled between Q1 and Q2 2013. There was a 13 percent annual increase for commercial bank portfolio loans, an 8 percent increase for Government Sponsored Enterprise (or GSE - Fannie Mae and Freddie Mac) loans, and lending by Commercial Mortgage Backed Securities (CMBS) Conduits fell 14 percent.

On a year-to-date basis commercial and multifamily mortgage originations were eight percent higher than originations during the same time period of 2012.  Originations for multifamily properties were up 31 percent, hotel properties 13 percent, and industrial and office properties rose 1 and 2 percent respectively.  So far this year retail properties are down 19 percent and health care properties 27 percent from 2012 figures.   

Among investor types, year-to-date (through the second quarter) 2013 versus the same time period in 2012, loans for conduits for CMBS saw an increase in loan volume of 22 percent, loans for GSEs saw an increase in loan volume of 20 percent, originations for commercial bank portfolios increased 11 percent and loans for life insurance companies were even year-to-date 2013 versus year-to-date 2012.