A new report from the Mortgage Bankers Association (MBA) projects a significant increase in commercial and multifamily loan activity in 2021.
Specifically, the report anticipates that commercial and multifamily mortgage bankers will close $578 billion of loans backed by income-producing properties in 2021, a 31 percent increase over last year.
Total multifamily lending alone, which includes some loans made by small and midsize banks not captured in the overall total, is expected to rise 13 percent to $409 billion in 2021. Further, MBA anticipates additional increases in lending volumes in 2022, with activity rising to $597 billion in commercial/multifamily mortgage bankers originations and $421 billion in total multifamily lending.
“Commercial and multifamily real estate markets are moving past the pain that the COVID-19 pandemic caused in 2020,” Jamie Woodwell, MBA’s vice president for commercial real estate research, said. “There remain significant differences by property type, but incomes have rebounded strongly, and investor interest in real estate and real estate finance is robust. The result is strong property appreciation and increased transaction activity, both of which is fueling financings.”
MBA’s forecast is based on projections of a continuing economic recovery this year and next. Woodwell added that the forecast could be different if the market is significantly impacted by new strains of COVID-19, but that’s not expected. And if even if it did have an impact, it would be nothing like the effect of the pandemic in 2020.
The annual trend was buoyed by a strong second quarter as commercial and multifamily mortgage loan originations were 106 percent higher in the second quarter of 2021 than a year ago. Also, they were up 66 percent from the first quarter of 2021, according to MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
“Borrowing and lending tied to commercial and multifamily properties rebounded in the second quarter,” Woodwell said. “Mortgage originations doubled compared to the second quarter of 2020 when loan demand cratered, and pandemic-related uncertainty made extending credit difficult. Even more notable is that compared to levels seen in 2019, a record year for originations, this year’s second quarter showed a modest 1 percent increase.”
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