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Commercial and multifamily lending expected to reach a new apex


The Mortgage Bankers Association (MBA) anticipates a record haul for commercial and multifamily mortgage bankers, projecting the closing of $652 billion of loans backed by income-producing properties in 2019.

apartmentrentThat’s 14% more than last year’s record loan volume of $574 billion. And the MBA forecasts even more growth ahead, with commercial and multifamily loan volume projected to rise to $700 billion in 2020.

Multifamily lending, which includes some loans made by small and midsize banks not included in the overall commercial and multifamily total, also is expected to rise. The MBA forecasts multifamily lending to grow to $359 billion in 2019, up from last year’s record total of $339 billion, and anticipates another jump to $390 billion in 2020.

The optimistic forecast is driven by favorable market conditions, including historically low interest rates, according to the MBA.

“The low interest rate environment, coupled with still strong demand for commercial and multifamily assets, has pushed property values higher and increased demand for mortgages,” said Jamie Woodwell, MBA’s vice president for commercial real estate research.

“At the beginning of the year, many economists, investors and others anticipated long-term rates would currently be in the 3% range and rising — potentially putting pressure on property values and decreasing demand for debt. Instead, the 10-year Treasury yield is at approximately 1.5%, and many market participants are planning for rates to remain ‘lower for longer.’ The result is heightened demand and higher volumes.”

Also playing a part in the upward forecast was the recent re-benchmarking of the size of the multifamily lending market, based on new data. Banks originated more than $100 billion in multifamily mortgages in 2018, significantly more than previously estimated.


 

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