Commercial and multifamily mortgage loan originations decreased 47% year over year during the third quarter, according to the Mortgage Bankers Association (MBA).
It’s the third straight quarter of declines in commercial and multifamily lending volume as reported by the MBA. The year’s first quarter saw a small 2% annual decline, with the beginnings of the stateside coronavirus crisis derailing what was expected to be an active start to 2020. Since, the commercial/multifamily sphere has seen severe plunges in borrowing, with Q3 following a second quarter when volumes tumbled 48%.
“Borrowing and lending backed by commercial and multifamily mortgages remained subdued during the third quarter,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Every major property type and capital source recorded a decline compared to last year’s third quarter.”
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Loans for hotel properties — a sector that has been hammered by the COVID-19 crisis — continued to plummet, with the third quarter posting a 94% year-over-year decrease in dollar volume. Retail, another segment struck hard by coronavirus, logged an 83% drop. Office properties and health care properties took year-over-year losses of 58% and 53%, respectively.
Other sectors fared relatively better in the third quarter. Industrial and multifamily property lending continued to weather the pandemic storm in relatively better shape, with the former seeing a 23% annual decrease in dollar volume and the latter falling 31%. In the case of multifamily, Woodwell noted that the segment was boosted by loans made for Fannie Mae, Freddie Mac and the Federal Housing Administration.
On a positive note, originations grew 12% from the second quarter to the third, perhaps signaling that while activity is muted, investment is starting to ramp up. Industrial properties, in particular, saw notable growth, leaping up 67% quarter over quarter. Office originations grew 35%, health care originations climbed 32% and multifamily volumes increased 4%. Retail and hotel retained weakness, falling 27% and 45%, respectively, quarter over quarter.
