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MBA: Commercial, Multifamily Borrowing Falls 18 Percent in Fourth-Quarter 2020

WASHINGTON, D.C. — Commercial and multifamily mortgage loan originations were 18 percent lower in the fourth quarter of 2020 compared to a year ago, and increased 76 percent from the third quarter of 2020, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

A decrease in originations for hotel, retail, office and healthcare properties led the overall decline in lending volumes when compared to the fourth quarter of 2019. There was a 79 percent year-over-year decrease in the dollar volume of loans for hotel properties, 72 percent dip for retail properties, 6 percent decline for office properties and a 12 percent decrease for healthcare properties. Industrial property loan originations increased 15 percent, while multifamily property lending rose 14 percent.

Jamie Woodwell, MBA’s vice president of commercial research, says that unsurprisingly the data shows that the property types most affected by the pandemic struggled to transact.

“Borrowing and lending remain weakest for the property types most impacted by the pandemic — particularly hotel and retail buildings,” says Woodwell. “Multifamily, led by government-backed financing from FHA, Freddie Mac and Fannie Mae, continued to see the strongest commercial mortgage activity.”

Among investor types, the dollar volume of loans originated for commercial mortgage-backed securities (CMBS) declined by 64 percent. There was a 40 percent decrease for commercial bank portfolio loans and a 33 percent decrease in life insurance company loans. Agency loans (Fannie Mae and Freddie Mac) had an 84 percent increase year-over-year.

2020 a down year
The Washington, D.C.-based organization found that borrowing and lending in 2020 was 30 percent lower than in 2019, with all major property types and most capital sources — outside government-backed loans — seeing lower levels of activity year-over-year. The 2020 results are preliminary, and MBA plans in late March to release its Annual Origination Summation report with final origination figures for 2020.

By property type, originations for hotel properties decreased 77 percent from 2019, and there was a 69 percent decline for retail properties, 50 percent drop for office properties, 27 percent decrease for healthcare properties, 18 percent dip for industrial properties and multifamily property originations fell by 8 percent.

Click here to read MBA’s full quarterly report.

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