ORLANDO, FLA. — The Mortgage Bankers Association (MBA) projects that originations of commercial and multifamily mortgages will grow to $511 billion in 2016, a 3 percent increase in volume on a year-over-year basis and slightly more than the previous record of $508 billion originated in 2007. More specifically, the volume of mortgage banker originations for multifamily mortgages is projected to reach $202 billion in 2016, with total multifamily lending expected to reach $262 billion. MBA unveiled its forecast during the second day of the organization’s Commercial Real Estate/Multifamily Housing Finance Convention in Orlando, which runs through Wednesday and has attracted 3,000 attendees.
“This past year was extremely strong for commercial real estate finance,” says Jamie Woodwell, vice president of commercial real estate research for MBA headquartered in Washington, D.C. “Property incomes are rising, interest rates are low and property values are up. We expect the momentum to continue into 2016 and to support both the demand for, and supply of, commercial and multifamily mortgage capital.”
A growing U.S. economy and expectations of only gradual increases in interest rates will combine to support a strong commercial property market, emphasizes Woodwell. “But there is a chance that cap rates could increase more rapidly in response to rising interest rates, impacting property sales and mortgage originations,” the veteran researcher is quick to add. All told, U.S. commercial/multifamily mortgage debt outstanding is expected to continue to grow in 2016, ending the year at $2.9 trillion, more than 3 percent higher than at the end of 2015.