Commercial And Multifamily Mortgage Originations Surge 59% In Q3 As Market Heats Up

According to the Mortgage Bankers Association (MBA), commercial and multifamily mortgage loan originations rose by 59% in the third quarter compared to the same period a year ago and were up 44% from the second quarter of 2024.

"After a slow start to the year, borrowing and lending backed by commercial real estate properties picked up during the third quarter," said Jamie Woodwell, MBA's head of commercial real estate research.

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Woodwell stated that lower interest rates were a key driver, with the yield on the 10-year Treasury bond dropping from an average of 4.31% in June to 3.72% in September. However, long-term rates have increased recently, which could slow last quarter's momentum.

"Each property and loan is unique and faces a different situation depending on its property type, market, submarket, vintage, business plan and more," Woodwell said. "All those factors will play a role in the volume of borrowing/lending in coming quarters."

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The MBA's Quarterly Survey of Commercial/Multifamily Mortgage Bank Originations also showed that originations in the third quarter varied across property types.

The third quarter of 2024 witnessed a surge in commercial and multifamily mortgage loan originations.

A breakdown of the year-over-year percentage increases by property types reveals notable trends:

• Health care properties: 510%
• Hotel properties: 99%
• Retail properties: 82%
• Industrial properties: 57%
• Multifamily properties: 56%
• Office properties: negative 3%

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In terms of investor types, commercial mortgage-backed securities (CMBS) saw a substantial 260% year-over-year increase in loan originations. Other notable increases included depository loans (69%), investor-driven loans (62%), life insurance company loans (31%) and government-sponsored enterprise (GSE) loans from Fannie Mae and Freddie Mac (28%).

In the third quarter, commercial and multifamily loan originations increased substantially. Compared to the second quarter, health care property originations soared by 191%. There were also significant increases in originations for retail properties (56%), multifamily properties (52%), office properties (42%) and industrial properties (21%). Hotel property originations declined by 25%.

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Investor-driven lenders, depositories, GSEs and life insurance companies were among the key drivers of the increased origination activity. Between the second and third quarters, these investor types saw significant growth in loan originations, with depositories leading the way at 86%, followed by GSEs (55%), life insurance companies (40%), investor-driven lenders (21%) and CMBS (12%).

Loan originations are on the rise even as commercial real estate foreclosures surge across the U.S., according to a recent report from real estate data provider ATTOM. Foreclosures increased 48% in September year-over-year, a trend likely influenced by rising interest rates and the impact of post-pandemic shifts in demand, especially for office space.

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