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Commercial lending declines on higher rates

Commercial lending across most property types was down in the third quarter of 2018 as higher interest rates slowed activity, the Mortgage Bankers Association (MBA) reported.

Overall commercial/multifamily volume declined by 3 percent over the third quarter, and was down 7 percent compared to a year earlier.

“Rising interest rates took some wind out of the market’s sails,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research.

“The CMBS and bank lending markets were the hardest hit. Meanwhile, lending backed by multifamily properties and for the government sponsored enterprises (GSEs) continued to grow,” Woodwell said.

Among investor types, the third-quarter dollar volume of commercial mortgage-backed securities (CMBS) loans and of loans for commercial bank portfolios declined by 53 percent and 22 percent, respectively. Originations increased for life insurance companies, up 4 percent, and Fannie Mae/Freddie Mac, up 3 percent.

By property type, there was a 55 percent year-over-year decrease in the dollar volume of loans for healthcare properties; a 28 percent decrease for retail properties; a 19 percent decrease for hotel properties; and a 17 percent decrease for office properties. Multifamily and industrial property originations last quarter increased by 19 percent. 


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