Commercial and multifamily mortgage loan originations increased 59% in the third quarter of 2024 compared to a year ago, and increased 44% from the second quarter of 2024, according to the Mortgage Bankers Association (MBA).
Originations in the third quarter of 2024 varied across property types. There was a 510% year-over-year increase in the dollar volume of loans for health care properties, a 99% increase for hotel properties, an 82% increase for retail properties, a 57% increase for industrial properties, and a 56% increase for multifamily properties. Office property originations decreased 3%.
“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, in a statement. “Lower interest rates were a key driver of the increase, with the yield on the 10-year Treasury bond dropping during the quarter from an average of 4.31% in June to 3.72% in September.”
Woodell added that a recent rise in interest rates could slow the momentum of commercial borrowing. “Each property and loan is unique and faces a different situation depending on its property type, market, submarket, vintage, business plan and more,” he said. “All those factors will play a role in the volume of borrowing/lending in coming quarters.”
Originations for health care properties increased 191% in the third quarter compared to the second quarter of 2024. There was a 56% increase quarter over quarter in originations for retail properties, a 53% increase for multifamily properties, a 42% increase for office properties and originations for industrial properties increased 21%. The dollar volume of loans for hotel properties decreased 25% in the third quarter compared to the previous one.
Among investor types, the dollar volume of loans originated for commercial mortgage-backed securities increased by 260% year-over-year. There was a 69% increase for depository loans, a 62% increase for investor-driven lender loans, a 31% increase in loans for life insurance companies and a 28% increase for government-sponsored enterprises loans.
