Commercial And Multifamily Mortgage Originations Surge 27% In Q2

Commercial and multifamily loan originations skyrocketed 27% from the year’s first quarter. They ticked up 3% compared to a year ago, according to the Mortgage Bankers Association's (MBA) second-quarter survey.

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"Borrowing and lending backed by commercial real estate remained subdued in the second quarter," said Jamie Woodwell, MBA's head of commercial real estate research. "Most capital sources remain ready, willing and able to lend on properties that can support a loan. Driven by growth in the single-asset single-borrower markets, originations for CMBS [commercial mortgage-backed securities] grew significantly during the quarter."

The second quarter of 2024 saw a significant increase in commercial loan originations, with several property types experiencing substantial growth. Health care properties led the surge with a 178% increase from the previous quarter. Hotels followed closely with an 84% rise, while industrial properties saw a 29% increase and multifamily properties experienced a 27% uptick. Retail properties also recorded an 18% increase, while office properties saw a more modest 4% growth in loan dollar volume.

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Investor types also played a significant role in the increased originations. Life insurance companies saw a substantial 60% increase in loan dollar volume from the first to the second quarter. Depositories and CMBS experienced 21% increases, while investor-driven lenders saw a 20% rise. Government-sponsored enterprises (GSEs) also contributed to the growth with a 16% increase in loan dollar volume.

While several commercial property types saw significant year-over-year increases in mortgage loan originations during the second quarter, others experienced declines. Hotels led the surge with a 172% increase, followed by industrial properties at 77% and health care properties at 50%. However, retail properties saw a 7% decline, multifamily properties decreased by 14% and office properties experienced a more substantial 29% drop.

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Among investor types, CMBS saw a dramatic 154% increase in loan dollar volume year over year. Investor-driven lenders also experienced growth, with a 17% increase. Life insurance companies saw a more modest 11% rise. Conversely, depositories and GSEs faced declines, dropping by 26% and GSEs by 20%.

"With interest rates moderating and a large slug of loans maturing, it is likely we'll see more borrower activity in the coming quarters," Woodwell said. 

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